More from Infinity
Commodity Investing – Commodities 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 raw materials lost 0.6 percent at 11:49 a.m. in New York as oil dropped 1 percent and copper fell 0.3 percent. The Standard & Poor’s 500 Index lost 0.2 percent to 1,368.21 as almost 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 decreased two basis points to 2.01 percent. The yen strengthened against all 16 of its most-traded peers and the dollar appreciated versus 10 of 16.
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.
“Commodity market watchers have cautioned quite some time ago that ‘as goes China so do commodities,’” Jon Nadler, an analyst at Kitco Inc. in Montreal, wrote in a note today. “When combined with the data concerning that country’s factory output and consumer retail activity, the conclusion that China is indeed experiencing notable difficulties is obviously not very hard to draw.”
Eighteen of 24 commodities tracked by the S&P GSCI index declined. Oil fell 1 percent to to $106.37 a barrel, natural gas declined 3.6 percent to $2.241 per million British thermal units and copper dropped 0.3 percent to $3.8480 a pound. Cotton pared losses after tumbling as much as 2 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 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, financial shares fell 0.7 percent as a group to lead declines among the 10 main industries. JPMorgan Chase & Co. and Bank of America Corp. lost at least 0.8 percent to pace declines among the biggest banks.
Investors may be disappointed by how U.S. banks perform in Federal Reserve stress tests as examiners expect consumer-loan losses to surpass the industry’s estimates if there’s another severe recession, analysts say.
The Fed generally has predicted firms would suffer greater losses on mortgages and credit cards than what banks estimated in capital plans submitted in January, two people with knowledge of the situation said last week, without identifying specific firms. The divergence may endanger some of the $9 billion in dividend increases and share buybacks analysts estimate may be announced after the Fed releases results this week.
Gauges of energy and commodity shares fell at least 0.3 percent for the next-biggest declines while utilities, consumer- staples and phone companies had the biggest gains among the 10 main groups.
The S&P GSCI Total Return Index of raw materials had rallied 8.8 percent in 2012 through last week, while the S&P 500 had climbed 9 percent in its best start to a year since 1998.
“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.”
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.
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 5.3 percent after the company terminated merger talks with Misys Plc. Banca Monte dei Paschi di Siena SpA sank 5.1 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 fell more than 1.3 percent for 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.
The MSCI Emerging Markets Index lost 0.9 percent as stocks in Argentina, the Czech Republic and Taiwan led declines that overshadowed gains in Indian shares after 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.
- Rob Verdonck in London and Debarati Roy in New York at Bloomberg.