By Rob Verdonck and Michael P. Regan - Mar 12, 2012 9:41 PM GMT+0700
Oil and copper snapped a three-day advance while most U.S. stocks fell and the yuan weakened after Chinese exports grew at a slower pace than forecast, fueling concern about the global economic recovery. Treasuries rose.
The S&P GSCI Index of commodities lost 1 percent at 10:37 a.m. in New York as oil dropped 1.7 percent and copper fell 0.8 percent. The Standard & Poor’s 500 Index lost 0.2 percent to 1,368.1 as two stocks fell for each that rose on U.S. exchanges. The Stoxx Europe 600 Index (SXXP) slipped 0.4 percent. Ten-year Treasury note yields slipped two basis points to 2.01 percent. The yen strengthened against all 16 of its most-traded peers and the dollar appreciated versus 15 of 16.
Oil fell to $106.27 a barrel. Photographer: Daniel Acker/Bloomberg
March 12 (Bloomberg) -- Sony Kapoor, managing director of Re-Define, talks about the outlook for the European economy as the region’s finance ministers prepare to approve a second bailout package for Greece. He speaks with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)
March 12 (Bloomberg) -- Kathy Matsui, chief Japan equity strategist and co-head of Asia investment research at Goldman Sachs Group Inc. in Tokyo, talks about the impact of the March 11 disaster on Japan's stock market and investor sentiment. Matsui speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
March 9 (Bloomberg) -- Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo, talks about Japanese companies' recovery after last year's March 11 disaster and the prospects for the nation's economy. Sakurai speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
China weakened its daily fixing for the yuan by the most since August 2010 after reporting the biggest trade deficit in at least 22 years on March 10, sapping optimism that was spurred last week by stronger-than-forecast jobs data in the U.S. European finance ministers are meeting in Brussels today to complete the 130 billion-euro ($170 billion) aid package for Greece and discuss Spain’s budget-cutting efforts.
“It’s been a much better start to the year than most investors had expected,” Henrik Drusebjerg, a Copenhagen-based strategist at Nordea Bank AB who helps oversee $230 billion, said in an interview today. “What most of us had expected as a return for the whole year has come around in two months. If there’s anything indicating that global growth is having problems, people will be very quick to take some profits.”
Oil Declines
The S&P GSCI Total Return Index of raw materials had rallied 8.8 percent through last week, while the S&P 500 had climbed 9 percent in its best start to a year since 1998.
Oil fell to $105.63 a barrel, natural gas declined 2.9 percent to $2.257 per million British thermal units and copper dropped to $3.8260 a pound. Cotton tumbled more than 1.5 percent.
Exports from China rose 18.4 percent last month from a year earlier, while imports gained 39.6 percent. Analysts forecast a 31.1 percent increase in overseas sales and that inbound shipments would rise 31.8 percent, based on estimates from Bloomberg News surveys.
“The data from China is a downside pressure on the oil market,” said Ken Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo. “The trade deficit is much bigger than expected.”
The yuan weakened to 6.3266 per dollar for the biggest drop since January. The daily reference rate was set 0.33 percent lower at 6.3282 per dollar. The currency can move 0.5 percent either side of the fixing.
Among U.S. stocks, gauges of financial and energy shares fell at least 0.5 percent for the biggest declines as utilities, consumer-staples and phone companies had the biggest gains among the 10 main groups. JPMorgan Chase & Co., American Express Co. and Caterpillar Inc. had the biggest declines in the Dow Jones Industrial Average, while Alcoa Inc. and Merck & Co. rose the most.
Transportation and industrial shares are diverging from the rest of the U.S. market, a signal that equity investors are starting to agree with what the bond market already knows: this economic recovery will remain sluggish for months to come.
The Dow Jones Transportation Average fell 3.9 percent from its six-month high on Feb. 3 through March 9, while the Dow Jones Industrial Average added 0.5 percent. The gauge of 20 shipping companies from FedEx Corp. to United Continental Holdings Inc. peaked before the rest of the market when the technology bubble popped in 2000 and began slipping into a bear market three months before broader benchmark indexes in 2007.
Treasury Auction
The benchmark 10-year U.S. Treasury yield halted a three- day increase as the nation prepared to sell $32 billion of three-year notes today. Two-year yields were down less than one basis point at 0.318 percent.
Retail sales in the U.S. increased 1.1 percent in February, the most in five months, according to the median estimate of economists in a Bloomberg News survey before Commerce Department figures due tomorrow. Data on March 9 showed nonfarm payrolls increased by 227,000 in February after rising by a revised 284,000 the prior month. The unemployment rate held at a three- year low of 8.3 percent.
Among European stocks, Temenos Group AG dropped 4.3 percent after the company terminated merger talks with Misys Plc. Banca Monte dei Paschi di Siena SpA sank 5.6 percent after its biggest investor reached an agreement with banks that hold part of its stake as collateral on a loan. Mining companies and banks had the largest declines of the 19 industries in the Stoxx Europe 600 Index (SXXP) .
The cost of insuring European sovereign bonds rose for a second day, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing four basis points to an eight-week high of 355.5.
Indian shares rose after the policy makers unexpectedly cut reserve requirements for lenders. The BSE India Sensitive Index, or Sensex, gained 0.5 percent after the central bank on March 9 reduced the amount of deposits lenders need to set aside as reserves to ease a cash squeeze in the banking system.
To contact the reporters on this story: Rob Verdonck in London at rverdonck@bloomberg.net; Michael P. Regan in New York at mregan12@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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