BLBG: Dollar Gains While Europe Stocks, Bonds Rally on Stimulus
The dollar climbed to an 11-month high versus the euro, while European stocks and bonds advanced on prospects for increased economic stimulus. Standard & Poor’s 500 Index futures (SPX) rose.
The U.S. currency appreciated 0.3 percent to $1.3197 per euro by 7:20 a.m. in New York, trading at its strongest level since Sept. 9. The Stoxx Europe 600 Index added 0.6 percent in below average trading as U.K. markets were closed for a holiday. S&P 500 futures rose 0.3 percent. Yields on 10-year Italian and Spanish bonds dropped to all-time lows as did rates on German five-year and Belgian two-year notes. Gold slipped 0.1 percent.
European Central Bank President Mario Draghi and Bank of Japan chief Haruhiko Kuroda raised the likelihood of measures to support growth during a meeting of central bankers in Jackson Hole, Wyoming. Federal Reserve Chair Janet Yellen said slack remains in the labor market, though rates could be raised sooner than expected. German business confidence dropped for a fourth month, according to an Ifo institute report today, before data that will probably show U.S. new-home sales rose, based on a Bloomberg survey.
“The messages from Yellen and Draghi solidify a market view on policy divergence between the Fed and the ECB,” said Peter Rosenstreich, a chief foreign-exchange analyst at Swissquote Bank SA in Gland, Switzerland. “There were some holdouts in the market who didn’t quite believe that Yellen is ready for a tighter policy and Draghi is ready to put forward any significant broad-based purchases. What we heard over the weekend is that yes, these are on the table.”
Euro Weakens
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, climbed 0.1 percent today, extending last week’s 0.9 percent advance and headed for the highest close since Feb. 3.
The euro weakened against all but one of its 16 major counterparts. ECB policy makers “stand ready to adjust our policy stance further” and will use all available instruments to “ensure price stability over the medium term,” Draghi said on Aug. 22.
BOJ Governor Kuroda said at Jackson Hole that his bank’s monetary policy was “having its intended effect” and that central banks must fight deflation by any and all means.
The Italian 10-year rate dropped as much as 10 basis points to 2.47 percent, the lowest since at least 1993. German five-year yields fell five basis points to 0.17 percent after reaching 0.167 percent, while Belgian two-year yields slid below zero for the first time.
The 10-year U.S. Treasury yield slipped two basis points to 2.38 percent.
Banks Gain
Nine shares advanced for every one that declined in the Stoxx 600, while 194 shares were unchanged and trading was 69 percent lower than the 30-day average, according to data compiled by Bloomberg. Banks gained, with BNP Paribas SA advancing 1.1 percent and Banca Monte dei Paschi di Siena SpA climbing 5.1 percent.
Arkema SA (AKE) rose 2.7 percent after Deutsche Bank AG recommended buying shares of the French chemicals maker. Eurazeo SA advanced 2.4 percent after Societe Generale SA raised its rating on the private-equity firm. Vivendi SA climbed 0.9 percent after a report that Telefonica SA is considering raising its bid for the French media company’s Brazilian Internet-provider unit GVT.
Futures on the S&P 500 rose after the index rallied for a third week. It closed at a record on Aug. 21.
Tim Hortons
Tim Hortons Inc. jumped 13 percent in German trading and Burger King Worldwide Inc. climbed 7.6 percent. The second-largest U.S. burger chain is in talks to buy the seller of coffee and doughnuts and move its headquarters to Canada, the companies said in a statement.
U.S. new-home sales increased to a 429,000 annualized pace in July from 406,000 in June, according to the median of 51 estimates in a Bloomberg survey of economist. The report is due at 10 a.m. in Washington.
The Chicago Mercantile Exchange started electronic futures trading after a technical issue halted markets for as long as four hours. Trading in futures in Chicago, except for Malaysian stock-index derivatives, was delayed, CME Group Inc. said on its website. CME’s Globex resumed at 9 p.m. in Chicago yesterday, it said.
The MSCI Emerging Markets Index slipped 0.1 percent. Russia’s Micex advanced 0.3 percent. VTB Group rose 1 percent after the government said it will buy shares in the nation’s second-biggest lender.
Minsk Talks
Russian President Vladimir Putin is scheduled to meet tomorrow with his Ukrainian counterpart Petro Poroshenko during trade talks in Minsk, Belarus. Poroshenko said yesterday military spending would increase by more than 40 billion hryvnia ($3 billion).
The Shanghai Composite Index dropped 0.5 percent, while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 0.5 percent. The S&P BSE Sensex rose less than 0.1 percent, paring earlier gains. Metal producers declined after the highest court said giving away coal mines to companies including Tata Steel Ltd. and Jindal Steel & Power Ltd. since 1993 was illegal. Jindal lost 14 percent and Tata slid 4.8 percent.
Gold dropped to $1,278.40 an ounce after advancing 0.3 percent on Aug. 22, its first increase in six days.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Justin Carrigan at jcarrigan@bloomberg.net Justin Carrigan
