By Stephen Kirkland & Richard Frost - Jun 26, 2013 1:07 PM GMT+0400
Bullion is down 25 percent this year and entered a bear market in April, after 12 years of gains, as investors lost faith in the metal as a store of value. Photographer: Akos Stiller/Bloomberg
European shares rose and the cost of insuring corporate debt fell as Chinese money-market rates retreated for a fourth day. Gold led commodities lower while Treasuries rose for the first time in eight days.
The Stoxx Europe 600 Index advanced 1.2 percent to 283.01 at 10 a.m. in London. Standard & Poor’s 500 Index futures added 0.2 percent. The cost of locking in China’s interest rates fell for a fourth day, the longest run of declines since February. Gold dropped 3.3 percent and silver slumped 5.1 percent. Treasury 10-year note yields slipped four basis points to 2.57 percent.
A financial trader monitors data on computer screens beneath a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg
June 26 (Bloomberg) -- Michael Kurtz, the Hong Kong-based chief global equity strategist at Nomura Holdings Inc., talks about China's economy, stocks, and government and central bank policies. He speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 26 (Bloomberg) -- Steven Sun, a Hong Kong-based China equity strategist at HSBC Holdings Plc, talks about People's Bank of China cash squeeze and its impact on the nation's stock market. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)
June 26 (Bloomberg) -- Michael Shaoul, chairman of Marketfield Asset Management in New York, talks about China's banking industry and central bank monetary policy. Shaoul also discusses the prospects for the U.S. economy, stocks and Federal Reserve policy. He speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
Bullion is down 25 percent this year and entered a bear market in April, after 12 years of gains, as investors lost faith in the metal as a store of value. Photographer: Akos Stiller/Bloomberg
The MSCI All-Country World Index of global stocks fell 4.5 percent in June, trimming this year’s gain to 3.2 percent, as theFederal Reserve said it may taper monetary stimulus and investors speculated rising Chinese funding costs will slow the its economy. German consumer confidence is set to increase next month, an industry report showed today, before data from the U.S. that will probably confirm growth accelerated in the first quarter. China’s central bank will use tools to safeguard stability in money markets and tight liquidity is set to ease, it said yesterday.
“The first leg of the correction is close to over and the markets should be more stable going into month end,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities. “The Chinese central bank’s liquidity pledge has calmed markets in the short term, but the picture is not that clear in the medium term.”
Earnings Beat
The Stoxx 600 extended its rebound from a six-month low as 18 of 19 industry groups advanced. Colruyt SA jumped 7 percent, the most in almost a year, after Belgium’s biggest discount food retailer reported earnings that topped estimates. Afren Plc, a U.K. oil explorer in Africa and northern Iraq, rallied 6.8 percent after discovering a “significant” light oil field inNigeria.
The volume of shares changing hands in Stoxx 600 companies was 13 percent greater than the 30-day average, according to data compiled by Bloomberg. The VStoxx Index of options prices on the Euro Stoxx 50 Index fell 5.4 percent to 22.83.
The Stoxx 600 has retreated 6.3 percent in June, its firstmonthly decline since May 2012. The gauge has fallen 4 percent this quarter, trimming this year’s advance to 0.9 percent.
The gain in S&P 500 futures indicated the U.S. gauge will extend yesterday’s 1 percent advance. Barrick Gold Corp., the world’s largest gold producer, slid 3.8 percent in early New Yorktrading as precious-metals companies retreated.
China Rates
The MSCI Emerging Markets Index rose for a second day, adding 1.2 percent. The Philippine Stock Exchange Index surged 5.5 percent after a five-day slump dragged valuations to a seven-month low. Benchmark gauges in Russia, Turkey,Indonesia, Thailand and Taiwan jumped more than 1.5 percent.
The Hang Seng China Enterprises Index of mainland companies rallied 3.3 percent, rebounding from the lowest level since October 2011. The one-year swap, the fixed cost needed to receive the floating seven-day repurchase rate, slid 20 basis points to 3.875 percent. The overnight repo rate dropped 40 basis points to 5.6 percent, according to a daily fixing compiled by the National Interbank Funding Center. It reached a record 12.85 percent on June 20 and has averaged 3.14 percent this year.
The People’s Bank of China has provided liquidity to some financial institutions to stabilize money-market rates, according to a release yesterday. The statement is the first public confirmation of central bank action to ease a crunch that sent the overnight repurchase rate to a record. Premier Li Keqiang is seeking to wring speculative lending out of the banking system after credit expansion outpaced economic growth.
Worst Quarter
European bonds rallied with U.S. Treasuries, paring the worst quarter for government debt since at least 1997. Spain’s 10-year yield fell 11 basis points to 4.96 percent, Germany’s dropped four basis points to 1.77 percent and Britain’s declined five basis points to 2.49 percent.
Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE index fell for the first time in seven days yesterday. The measure dropped to 108.44 after reaching 110.98 on June 24, the highest since November 2011. It has averaged 61.91 this year.
Securities in the Bank of America Merrill Lynch Global Broad Market Sovereign Plus Index lost 2.30 percent this quarter through yesterday, set for the worst performance since the indexes began tracking the data on Dec. 31, 1996. While the average yield on the securities has climbed to 1.79 percent from 1.43 percent on March 31, it is still below the mean of 2.06 percent for the past five years.
Yen Climbs
The yen strengthened 0.3 percent to 97.56 per dollar and appreciated 0.4 percent to 127.47 per euro. The dollar was little changed at $1.3064 per euro.
South Africa’s rand rose versus all of its 16 major peers. It’s the third-worst performer of 16 major currencies this quarter, with only the real and the Australian dollar falling more.
The JPMorgan Global FX Volatility Index was little changed at 11.35 percent after touching 11.96 percent on June 24, the highest since June 2012. The average for 2013 is 9.16 percent. Three-month implied volatility on the Australian dollar has risen the most of 16 major currencies tracked by Bloomberg this quarter.
The S&P GSCI gauge of 24 commodities declined 0.5 percent. Gold fell to $1,241.48 an ounce, and is heading for a quarterly drop of 23 percent, the most since at least 1920. Silver is down 34 percent for the second quarter, the most since September 2008. Trading in gold futures in New York was double the average for the past 100 days and silver trading was more than triple the average, according to data compiled by Bloomberg. Silver and gold fell to the lowest price since August 2010 today.
Copper dropped 1.5 percent and West Texas Intermediate oil fell 0.6 percent to $94.77 a barrel, heading for a quarterly decline of 2.5 percent.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stuart Wallace at Swallace6@bloomberg.net;
