< Back to News

Market Update


Stocks fell in Europe for a sixth day, U.S. index futures declined and the yen strengthened as concern deepened the global recovery may slow. Copper led commodities lower, while oil rallied after OPEC kept production targets unchanged.

The Stoxx Europe 600 Index slid 1 percent at 9:22 a.m. in New York and futures on the Standard & Poor’s 500 Index lost 0.4 percent. The yen appreciated against all 16 of its major peers.

German 10-year bond yields slipped three basis points to 3.06 percent, while the cost of insuring European government debt from default rose for a third day. Copper fell 1.5 percent, and crude gained 0.5 percent, rebounding from a 1.1 percent loss.

Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. recovery was “frustratingly slow,” without giving a hint of a new round of stimulus before the program of buying $600 billion in bonds ends this month. Global gross domestic product may expand 3.2 percent this year, less than the 3.3 percent forecast in January, the World Bank said. German industrial production unexpectedly declined for the first time in four months in April, the government said.

“Markets are a little bit more concerned that this loss of recovery momentum in the U.S. could translate into a loss of earnings momentum,” said Mike Lenhoff, London-based chief strategist at Brewin Dolphin Securities Ltd. “Markets have always been a bit apprehensive about the global economy’s transition from a recovery to a sustainable expansion.”

The Stoxx 600 fell to the lowest level in 2 1/2 months as all 19 industry groups retreated. BP Plc and Rio Tinto Group led commodity producers lower. Kabel Deutschland Holding AG sank 5 percent as Germany’s largest cable operator reported revenue that was at the low end of its forecast range and announced a dividend that trailed analysts’ estimates.

Beige Book

The drop in S&P 500 futures indicated the benchmark gauge for U.S. equities will slide for a sixth day. That would be the longest stretch of losses since February 2009. The yield on two- year Treasury notes fell one basis point to 0.40 percent. It reached 0.39 percent yesterday, the lowest since Nov. 9. The Fed is due to release its regional Beige Book economic survey today.

 

The yen appreciated 0.3 percent to 79.82 per dollar after touching 79.70, the strongest since May 5. Japan’s currency rose 0.9 percent against the euro. The pound dropped 0.5 percent against the dollar after Moody’s Investors Service said the U.K.’s Aaa credit rating may be at risk.

 

Portugal’s 10-year bond fell for a second day, sending the yield 15 basis points higher. The extra yield investors demand to hold the country’s debt instead of benchmark German bunds to a record 7.04 basis points, or 7.04 percentage points. The International Monetary Fund said its 26 billion-euro ($38

billion) loan to Portugal “entails important risks.”

Default Risk

The Markit iTraxx SovX Western Europe Index of credit- default swaps linked to the debt of 15 governments increased four basis points to 193 basis points.

The MSCI Emerging Markets Index retreated 0.6 percent, heading toward the lowest close in almost two weeks, after the World Bank said developing nations need to accelerate interest- rate increases. Poland’s WIG20 Index slipped 0.6 percent after the central bank raised its benchmark rate for the fourth time this year. Thailand’s SET Index dropped 1.9 percent as Credit Suisse Group AG said it’s “less optimistic” on the market before potential political instability tied to July 3 elections.