By Stephen Kirkland Shiyin Chen - Nov 25, 2011 7:42 PM GMT+0700
Nov. 25 (Bloomberg) -- Nick Maroutsos, co-founder of Sydney-based Kapstream Capital, talks about Europe's sovereign debt crisis and its implications for global financial markets. Maroutsos also discusses the U.S. economy and the nation's budget deficit. He speaks with John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)
Nov. 25 (Bloomberg) -- Marc Ostwald, a fixed income strategist at Monument Securities Ltd., discusses the International Monetary Fund's role in rescuing debt-laden euro-zone nations. He talks with Owen Thomas and Linda Yueh on Bloomberg Television's "Countdown." (Source: Bloomberg)
Stocks fell for a 10th day, the longest losing streak since July 2008, and the euro extended losses as the burden of government debt grew around the world. The cost of insuring European sovereign bonds against default rose to a record.
The MSCI All-Country World Index sank 0.5 percent at 7:35 a.m. in New York. Standard & Poor’s 500 futures slid 0.7 percent, signaling the index will drop for a seventh day when U.S. markets resume trading after the Thanksgiving break. The euro depreciated 0.7 percent to $1.3252, set for a fourth weekly decline. Hungary’s five-year yield climbed to a two-year high, while Japan’s 10-year yield rose above 1 percent for the first time in more than three weeks. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed four basis points to an all-time high of 384.5.
European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo urged euro-area politicians to take bold steps toward fiscal union to end the debt crisis, and said they should not rely on the ECB. European Union Economic and Monetary Affairs Commissioner Olli Rehn said it looks like contagion is spreading to core countries. Moody’s Investors Service cut Hungary’s debt to junk after S&P said yesterday Japan hasn’t made progress in tackling its debt load.
“We need to see more action out of Europe before any sort of rebound happens,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Greece, Ireland, Portugal are becoming after-thoughts as the crisis is now unfolding at the footsteps of Italy, France and Germany. These are the larger countries and these would have the largest knock-on effects.”
Banks Slide
The Stoxx Europe 600 Index dropped 0.3 percent, with more than three stocks falling for every one that rose. The gauge has lost 5.5 percent this week, its worst performance in two months. Banca Monte dei Paschi di Siena SpA of Italy, Erste Group Bank AG of Austria and Banco Comercial Portugues SA sank at least 4 percent.
Debt-insurance costs for European financial companies jumped to the highest ever, with the Markit iTraxx Financial Index of default swaps linked to the senior bonds of 25 banks and insurers increasing eight basis points to 353.
S&P 500 futures indicate U.S. stocks may extend a six-day, 7.6 percent slump that dragged the benchmark index down to the lowest level since Oct. 7. Trading will end at 1 p.m. today. The yield on the 10-year U.S. Treasury note jumped 4 basis points to 1.93 percent after the market was closed yesterday.
The euro declined 0.3 percent versus the yen, and 0.8 percent against the pound. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, climbed 0.4 percent.
Euro-Era Record
Italian five- and 10-year bonds extended declines after borrowing costs increased at a bill sale. The Rome-based Treasury sold 8 billion euros ($10.6 billion) of 183-day bills to yield 6.504 percent, up from 3.535 percent at the previous auction on Oct. 26. Five-year yields rose 28 basis points to 7.81 percent and 10-year yields climbed 22 basis points to 7.33 percent.
The Spanish two-year note yield exceeded 6 percent for the first time since the euro was created in 1999. Portugal’s 10- year bond yield rose 11 basis points to 12.32 percent, a day after the nation’s credit ranking was lowered to below investment grade by Fitch Ratings.
Largest Debt Burden
Japan’s benchmark bond yields completed the biggest weekly gain since January on concern the government will fail to rein in the world’s largest debt burden. Ten-year yields added 3.5 basis points to 1.03 percent at the 6:05 p.m. close at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The last time the rate rose above 1 percent was Nov. 1. Yields have climbed 8.5 basis points this week, the most since the period ended Jan. 7.
The MSCI Emerging Markets Index slid 1.4 percent. Hungary’s BUX Index lost 4.3 percent, the most in two months. Benchmark gauges in Poland and the Czech Republic sank at least 1.3 percent. Hong Kong’s Hang Seng China Enterprises Index slid 1.8 percent.
Gold fell 0.9 percent to $1,679.77 an ounce, heading for a second weekly decline. Oil slipped 0.8 percent to $95.37 a barrel. Soybean futures dropped as much as 1.5 percent to the lowest level since October 2010, and wheat futures slid 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Mark Gilbert at magilbert@bloomberg.net
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