By Stephen Kirkland and Rita Nazareth - Mar 5, 2012 10:15 PM GMT+0700
Stocks (MXWD) fell for a second day after China announced the lowest economic growth target since 2004 and European services and manufacturing output was less than earlier estimated. The yen strengthened, while oil erased early declines amid concern about tensions with Iran.
The MSCI All-Country World Index (MXWD) dropped 0.5 percent at 10:12 a.m. in New York and the Standard & Poor’s 500 Index slipped 0.2 percent, with both paring larger losses after U.S. economic data topped estimates. The yen strengthened against all 16 of its most-traded peers, while China’s yuan touched a four- week low. Oil was little changed at $106.62 a barrel, copper slid 1.4 percent and natural gas fell 4 percent. Ten-year Treasury yields rose one basis point to 1.98 percent.
The yen strengthened against all 16 of its most-traded peers, while China’s yuan touched a four-week low. Photographer: Tomohiro Ohsumi/Bloomberg
March 5 (Bloomberg) -- Stanley Crouch, chief investment officer of Aegis Capital Corp., talks about the outlook for global markets and investment strategy. Crouch speaks with Erik Schatzker, Stephanie Ruhle and Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
March 5 (Bloomberg) -- Arne Lohmann Rasmussen, chief analyst at Danske Bank A/S, discusses the outlook for commodities. He speaks from Copenhagen with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)
March 5 (Bloomberg) -- Mark Matthews, head of research for Asia at Bank Julius Baer & Co., talks about the outlook for the region's stock markets and investment strategy. Matthews also discusses China's economy. He speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
March 5 (Bloomberg) -- Wang Tao, a China economist at UBS AG, talks about Chinese government policy and the country's economic outlook. She speaks from Hong Kong with Caroline Hyde on Bloomberg Television's "First Word." (Source: Bloomberg)
China cut the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005, according to Premier Wen Jiabao’s speech at the National People’s Congress today. European services and manufacturing output shrank in February more than earlier estimated, Markit Economics said, before a report that may show U.S. factory orders fell for the first time in three months. Greece’s private creditors decide this week whether to sign off on the country’s debt restructuring.
“It’s just not an environment that we feel like sticking our neck out to take on a lot of risk,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “We’ve been scratching our heads a little bit after the big run-up in equities. We just don’t see a strong enough global economic background to support where prices are right now.”
Retreat From High
The S&P 500 fell for a second day after last week reaching its highest level since 2008. Equities pared losses after the Institute for Supply Management’s index of non-manufacturing industries rose to 57.3 in February, topping the median economist projection for a decline to 56. Commerce Department data showed orders to U.S. factories decreased in January for the first time in three months. Bookings declined 1 percent, less than the median prediction for a 1.5 percent drop.
EBay Inc., Joy Global Inc. (JOY)and Advanced Micro Devices Inc. dropped more than 1.1 percent to pace losses among the biggest companies. Zynga Inc. (ZNGA), the online-game company that sold shares to the public in December, and CF Industries Holdings Inc., North America’s largest maker of nitrogen-based fertilizer , lost at least 3 percent after the companies were downgraded.
Corporate profits that doubled since 2009 have left the Standard & Poor’s 500 Index cheaper than at all 34 peaks since 1989, even as options traders push the cost of protecting against losses to the highest in four years.
Valuations
Companies in the benchmark gauge of U.S. stocks (MXWD) trade for 14.1 times earnings after advancing 102 percent since March 2009 to an almost four-year high last week, data compiled by Bloomberg that excludes peaks that occurred within a month of one another. Valuations are lower than at every 52-week peak since 1989. Traders have pushed the price of contracts that pay should the S&P 500 drop 20 percent to the most since 2007 compared with ones betting on a rally of the same size.
The Stoxx Europe 600 Index (SXXP) sank 0.3 percent. Salzgitter AG dropped 5.6 percent, the most since November, as the German steelmaker said it’s “impossible” to give detailed earnings forecasts. BP Plc rose 1.5 percent after Europe’s second-biggest oil company reached a $7.8 billion settlement with businesses and individuals over the 2010 Deepwater Horizon oil rig disaster.
The yen climbed 0.1 percent against the euro and advanced 0.5 percent versus the dollar. The euro strengthened 0.2 percent to $1.3217.
The S&P GSCI gauge of 24 commodities added 0.2, led by gains in cotton and heating oil. Cotton jumped the daily maximum allowed of 4 cents a pound, or 4.5 percent, after India halted exports. India is the second-biggest exporter after the U.S.
Emerging Markets
The MSCI Emerging Markets Index (MXEF) fell 1.1 percent after closing at a seven-month high last week. The yuan declined 0.1 percent to 6.3067 per dollar and earlier touched 6.3076, the weakest level since Feb. 7, according to the China Foreign Exchange Trade System. The Hang Seng China Enterprises Index (HSCEI) slid 2.3 percent.
The Taiex index retreated 1.4 percent after Taiwanese technology companies reported slumping sales. The BSE India Sensitive Index fell 1.6 percent before the results of state elections tomorrow that may be crucial in determining the future of the ruling Congress Party’s economic agenda. The Micex Index (MICEX) gained 1.1 percent after Vladimir Putin won a presidential election in an endorsement of his pledge to continue to privatize state companies and undertake political reform.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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