Wednesday, 22 August 2012

Stocks Drop As Treasuries Gain On Japan Trade Data, Greek Appeal

By Michael Shanahan - Aug 22, 2012 3:08 PM GMT+0400

Stocks declined around the world and Treasuries advanced after Japan’s trade deficit widened more than expected. Gold rose for a sixth day as Greece asked for more time to carry out policy changes.
The MSCI All-Country World Index fell 0.3 percent at 12:06 p.m. in London as the Stoxx Europe 600 Index declined 0.9 percent. Futures on the Standard & Poor’s 500 Index slid 0.3 percent. Cotton dropped 2 percent and gold added 0.2 percent. The yield on 10-year Treasuries fell as much as three basis points to the lowest in a week and German bund yields dropped five basis points. The euro slid 0.2 percent against the dollar after reaching the highest in more than six weeks yesterday.
Technology shares fell after Dell forecast third-quarter revenue will drop 2 percent to 5 percent from the prior three-month period. Photographer: Keith Bedford/Bloomberg
Japan reported a July trade deficit of 517.4 billion yen ($6.5 billion) as Europe’s debt crisis curbed exports and FederalReserve Bank of Chicago President Charles Evans said a weakening in global trade is “awful.” Luxembourg Prime Minister Jean-Claude Juncker, the head of the euro group of finance ministers, visits Greece today. Greek Prime Minister Antonis Samaras said before the meeting that his country needs “more air to breathe” in dealing with its debt crisis.
“The global growth picture is still weak and this is evidenced by sluggish economic and corporate data,” said Allan Yu, who helps manage about $9.4 billion at Manila-based Metropolitan Bank & Trust Co. “These meetings in Europe will help set the global tone. If problems come about from these meetings, we will see a further deterioration in the global outlook.”

Dell Forecast

The Stoxx Europe 600 Index (SXXP) retreated the most in almost three weeks. A gauge of mining companies dragged the equity benchmark lower, with BHP Billiton Ltd. falling 1.6 percent in London after the world’s largest mining company put $68 billion of projects on hold. Rio Tinto Group, the third-biggest, declined 2.6 percent.
Heineken NV (HEIA) dropped 3.8 percent after the brewer reported first-half earnings before interest and taxes that missed analysts’ estimates as Europeans bought less beer.
S&P 500 futures slid, indicating the equity benchmark will extend yesterday’s decline. Dell Inc. (DELL) sank 3.9 percent in German trading after cutting its fiscal 2013 earnings forecast as sales of personal computers weaken.
STMicroelectronics NV, Europe’s largest chipmaker, fell 1 percent after Dell said third-quarterrevenue will drop 2 percent to 5 percent from the prior three-month period. Lenovo Group Ltd. (992), the second-biggest maker of personal computers, sank 1.8 percent in Hong Kong. Samsung Electronics Co., the largest semiconductor manufacturer, lost 1.4 percent in Seoul.
The 10-year Treasury note yield fell to as low as 1.77 percent, the least since Aug. 15. Germany’s 10-year yield dropped to 1.51 percent.

European Exports

Cotton weakened for the first time in four days. Consumption of the fiber in China, the largest user, may shrink 11 percent this year, Zhang Hongxia, chairman of Weiqiao Textile Co., the country’s largest cotton-textile maker, said in an interview. Gold rose to $1,644.28 an ounce, taking its six-day advance to 2.8 percent.
Trade data from Japan’s Finance Ministry today showed shipments to China slipped 12 percent in July from a year earlier, while those to the European Union fell 25 percent, the biggest decline since October 2009.
The euro was at $1.2451 after touching $1.2488 yesterday, the highest since July 5. German Chancellor Angela Merkel and French President Francois Hollande meet tomorrow to discuss the fiscal crisis, and both will talk separately with Greece’s Samaras later this week. Concessions are possible for Greece if the prime minister shows a willingness to meet the main targets set out in his country’s bailout program, a senior lawmaker with Merkel’s government said yesterday.

Emerging Markets

The MSCI Emerging Markets Index slid 0.5 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong retreated 1.1 percent, and Russia’s Micex Index slipped 0.6 percent.
Vietnam’s benchmark VN Index slumped for a second day, losing 1.5 percent. The gauge plunged 4.7 percent yesterday, the most since 2008, as Vietnam’s arrest of Nguyen Duc Kien, the founder of several banks, sparked concern about the vulnerability of the country’s financial system.
To contact the reporter responsible for this story: Michael Shanahan in London at
To contact the editor responsible for this story: Darren Boey at