BackUS stocks fall with emerging equities; dollar, treasuries gain
The S&P 500 Index fell 0.2%, paring an earlier drop of 1%
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New York: US stocks fell with emerging market equities as unrest in Hong Kong added to geopolitical uncertainty and American spending data sparked rate concern. The dollar strengthened to a four-year high and treasuries advanced.
The Standard & Poor’s 500 Index fell 0.2% at 12:04 pm in New York, paring an earlier drop of 1%. The Nasdaq 100 Index erased a 1.1% slide to trade little changed as Intel Corp. rallied. The MSCI Emerging Markets Index sank 1.3% as Brazilian stocks plunged. Russia’s RTS Index sank 2.6% to enter a bear market. The yield on 10-year treasury notes fell five basis points to 2.48%. The Bloomberg Dollar Spot Index rose 0.1% to extend a four-year high.
Consumer spending in the US rebounded in August as job gains encouraged households to loosen their purse strings, bolstering the argument that the Federal Reserve will be forced to raise rates earlier than estimated. Protesters in Hong Kong pledged to continue demonstrations unless the city’s top official steps down. HSBC Holdings Plc was among European lenders to close some Hong Kong branches, while data showed euro-area consumer confidence diminished in September.
“Hong Kong may have been a bit scary at first, but in a long-term perspective, it’s not for the people who are actually moving the money," Drew Wilson, an investment analyst with Fenimore Asset Management in Cobleskill, New York, said in a phone interview. “When you have a long-term perspective and the market gets whipsawed, there are periods that can be painful, but generally these swings can be portfolio opportunities."
Data Watch
Equities declined in early trading after the spending data showed an advance of 0.5% last month after little change in July. A separate report showed contracts to purchase previously owned homes declined in August.
The Nasdaq 100 erased its decline as Micron Technology Inc. jumped 2.1% and Intel Corp. rallied 2% to lead advances among technology shares.
The S&P 500 rallied 0.9% on 26 September on data indicating the economy expanded last quarter at the fastest rate since 2011. The gauge slid 1.4% for the week amid an escalation in the Middle East conflict and a sell-off in small-capitalized stocks and technology shares.
The index has gained 0.9% this quarter, poised for a seventh straight advance, the longest streak since 1998. It has not had a decline of more than 10% in three years.
“We’re in a giant yo-yo the past six sessions but central banks are still accommodative, US growth is decent, the grind higher is still in tact, we’re just hitting some bumps with macro issues," Michael Block, chief equity strategist at New York-based Rhino Trading Partners LLC, said in a phone interview.
Volatility Gauge
The Chicago Board Options Exchange Volatility Index, the gauge known as the VIX, jumped 5.6% to 15.68. The index rallied 23% last week, the most since 1 August.
Swings in equities have widened at the end of the quarter, with the Dow Jones Industrial Average alternating between gains and losses of more than 100 points the previous four days. The VIX averaged 14.5 last week, 12% above its mean level during the third quarter.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, is heading for its biggest quarterly advance since the third quarter of 2008.
The dollar rose 0.1% on Monday to ¥109.34 and touched 109.75, its highest level since August 2008. The euro gained 0.1% to $1.2696 per after falling earlier to $1.2664, the weakest level since November 2012.
Brazil, China
The MSCI Emerging Markets Index fell 1.3%. The gauge has lost 4% this quarter, set for the steepest slump since the period ended June 2013.
Brazilian shares retreated more than 4% after a poll showed increased support for President Dilma Rousseff’s re-election bid. Traders are paring bets on the chances a new government will be elected next month and jump-start economic growth after the country fell into a recession in the first half of the year.
The MSCI AC Asia Pacific Index slid 0.6% on Monday after a third weekly decline.
PetroChina Co. and Bank of China Ltd. sank more than 1.4% as the Hang Seng China Enterprises Index fell to a two- month low. Thousands of pro-democracy protesters remained near government offices in the Admiralty district after weekend clashes with police. The Hong Kong dollar weakened the most since 2011.
Russia Bear
In Ukraine, the country’s army endured its deadliest day since signing a ceasefire with pro-Russian militants 3 1/2 weeks ago, straining efforts to find a lasting settlement to the six-month conflict in the nation’s east.
Russia’s Micex Index lost 1.8%, while the dollar-denominated RTS Index fell 2.6%, bringing its decline from a June high to more than 20%.
In Europe, concern grew that the euro-area’s expansion continued to slow. An index of executive and consumer sentiment in the region slipped to 99.9 in September from 100.6 a month earlier, the European Commission in Brussels said on Monday. That’s the lowest since November and in line with the median of 25 forecasts in a Bloomberg News survey.
Banks in the Stoxx 600 plunged 1.5%. HSBC and Standard Chartered Plc slid more than 1.6% each as they shuttered some Hong Kong branches.
Europe Banks
Commerzbank AG fell 4.2% after a person familiar with the matter said the German lender faces a US inquiry into whether it broke anti-money-laundering laws.
UBS AG climbed 0.2% after Switzerland’s largest bank indicated profit for July and August already exceeds analyst estimates for the full third quarter.
Spanish and Italian bonds dropped after Catalonian President Artur Mas and Spanish Prime Minister Mariano Rajoy clashed over whether the region can keep planning a 9 November referendum on separation.
Spain’s 10-year yield rose three basis points to 2.22% and Italy’s increased two basis points to 2.41%.
New Zealand’s dollar plunged to as low as 77.09 US cents, the least since 5 August last year, after the central bank said it sold a net NZ$521 million in August, the most since July 2007. Prime Minister John Key said the so-called Goldilocks level for the nation’s currency is around 65 US cents, Interest.co reported, citing comments to reporters.
Commodity Moves
The Bloomberg Commodity Index rose 0.5% as coffee and gasoline climbed at least 1.2%. Gasoline advanced for the fourth time in five days on concern refinery shutdowns will reduce production.
Gold rose 0.3% to $1,218.60 as the decline in global equities boosted demand for the precious metal as an alternative investment.
Nickel fell for a third day and was poised to enter a bear market on record inventories even with an ore-export ban in Indonesia, the largest producer of unrefined metal. The metal dropped to $16,570 a metric tonne in London. A close at that price would be a 21% drop since 13 May.
Adam Haigh in Sydney, Paul Dobson, Cecile Vannucci, Claudia Carpenter, Laura Clarke, Zahra Hankir, Abigail Moses and Rob Verdonck in London, Nick Gentle in Hong Kong, Emma O’Brien in Wellington and Jeremy Herron in New York also contributed to this story.
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