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BLBG: Dollar and Stocks Slide, Bonds Rally With Gold After Jobs Data
 
S&P 500 falls from seven-month high, Europe shares erase gain
Bloomberg Commodity Index on cusp of entering a bull market
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U.S. stocks fell with the dollar, while Treasuries and gold rallied after American employers added the fewest jobs in almost six years in May, bolstering the case for the Federal Reserve to leave interests rates lower for longer.
The S&P 500 Index retreated from a seven-month high and Europe’s equity benchmark tumbled as concern mounted that the world’s largest economy may falter. Emerging-market shares surged. The dollar tumbled the most in more than two months versus the euro, while the yield on the two-year Treasury note sank 13 basis points, the most since September. Gold rallied with copper, helping send a gauge of commodities toward a bull market.
“That was very disappointing and adds a lot of uncertainty to a market that was gearing up for a summer rate hike from the Fed,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “It makes people question the real strength of the labor market. No doubt investors will want the Fed to tell us that this is some kind of one-off number and we shouldn’t worry. Really terrible timing, as confidence was just tentatively returning to the market.”

The addition of 38,000 jobs last month was less than the most pessimistic of forecasts in a Bloomberg survey, throwing cold water on equity gains that took the S&P 500 within 1.2 percent of its all-time high. Smaller employment gains reduce the odds of a more pronounced upturn economic growth at a time when corporate profits are on a downswing and global markets remain weak. The odds for a Federal Reserve rate increase fell to 29 percent in July, down from 55 percent a day earlier.
Stocks
The S&P 500 fell 0.4 percent to 2,097.52 at 9:33 a.m. in New York, erasing a gain for the week. The index slid back below 2,100 after closing higher than that for the first time since April. The level has capped two prior rallies in the past eight months.
The Stoxx Europe 600 Index slipped 0.6 percent, extending its first weekly decline in four to 2 percent. The MSCI Emerging Markets Index advanced 1.2 percent to a one-month high. The Shanghai Composite Index climbed 0.5 percent, taking its weekly gain to 4.2 percent, the first increase in the period for almost two months on speculation MSCI Inc. will include yuan-denominated shares in its global indexes.
Currencies
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 1.3 percent, reaching the largest decline since Feb. 3. The dollar dropped 1.5 percent to $1.1319 per euro and lost 1.5 percent to 107.21 yen.
The rand gained 0.9 percent, after appreciating 1.5 percent in the previous three days. South Africa faces the prospect of having its credit rating cut to junk when S&P Global Ratings announces the outcome of a review on Friday.
Commodities
The Bloomberg Commodity Index rose 1 percent to 87.6019, a seven-month high. The gauge bottomed this year at a closing low of 72.88 in January, and a finish above 87.45 points would mark a 20 percent advance, meeting the common definition of entry into a bull market.
Gold climbed 2.1 percent to $1,237.21 an ounce.
Zinc rose for a seventh day for its longest rising streak in almost two years amid continued speculation of a raw materials shortage, rising with copper and aluminum. Net-long positions in LME futures for the metal are close to an 11-month high seen in May, indicating that investors continue to bet on a rally.
Brent crude slid 0.4 percent to trade at $49.84 a barrel after closing yesterday at $50.04. The third drop in U.S. crude inventories in four weeks tempered the impact of OPEC’s decision to stick to a policy of unfettered production, turning down a proposal to adopt a new ceiling on output.
Soybean futures climbed 1.4 percent to the highest since June 2014, taking this week’s advance to more than 6 percent. Prices surged Thursday amid forecasts for dryer weather in the U.S. growing area.
Sugar rose to the highest in almost two years as heavy rainfall disrupted loadings at ports in Brazil, slowing down the harvest at a time of peak demand.
Bonds
Germany’s benchmark 10-year bond yields fell one basis point to 0.120 percent, an almost two-month low.
Turkish bonds advanced, sending the 10-year yield down 13 basis points to 9.68 percent after inflation in May was lower than analysts’ estimated.
Noble Group’s U.S. currency bonds due January 2020 surged by a record 9.4 cents to 84.3 cents on the dollar following the announcement of a rights issue by the company.
“The company is inflicting pain on equity holders, which is good news for credit investors,” said Leong Wai Hoong, a senior money manager in Singapore at Nikko Asset Management Asia Ltd.
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