Treasuries drop as US stocks gain; wheat reaches one-year high

London/New York: Treasuries fell for the first time in five days, while the US stocks advanced as data showed service industries expanded at the fastest pace in eight months. Wheat jumped to the highest level in a year and gold rose as violence spread in Ukraine.

Ten-year treasury yields added 2 basis points to 2.61% as of 2:45 pm in New York. The Standard & Poor’s 500 Index increased 0.1% to 1,883.64, after drifting between gains and losses for most of the day, while the Stoxx Europe 600 Index slipped 0.3%. The rate on Portugal’s five-year note approached a record low. The yen strengthened against most of its 16 major peers. Gold increased 0.8% and wheat gained 1.8%.

Services, the biggest part of the US economy, picked up in April amid gains in orders and sales that signal even faster growth ahead. Industries ranging from retailers to restaurants and construction companies were among the 14 sectors reporting growth last month as the world’s biggest economy rebounds from a first-quarter stall. The report helped the US stocks to erase losses spurred by conflict in Ukraine and data showing a gauge of Chinese manufacturing contracted for a fourth month.

“Investors continue to look for directions,” Joseph Tanious, a global market strategist at JPMorgan Asset Management in Los Angeles, said by phone. His firm oversees $1.6 trillion in client assets. “We’re seeing economic data continue to show modest improvement from first-quarter weather-related numbers. At the same time, you have this ongoing tension between Russia and Ukraine.”

ISM Services

The Institute for Supply Management’s non-manufacturing index rose to 55.2, higher than projected, from the prior month’s 53.1. Readings above 50 indicate expansion. The median forecast of economists surveyed by Bloomberg called for 54 in the gauge for services, which account for almost 90% of the economy.

Utility and energy shares rose the most among 10 industry groups in the S&P 500, while financial and consumer companies declined.

JPMorgan Chase & Co. declined 2.8% after saying a trading slump has deepened. Pfizer Inc. fell 2.6% after reporting first-quarter sales that missed analyst estimates as demand weakened for Lipitor and Viagra. Wincor Nixdorf AG slid 5.1% in Germany after the maker of self-checkout tills in supermarkets posted earnings that fell short of analysts’ estimates.

Wheat rose as violence in Ukraine spread to the country’s main grain-export port of Odessa, intensifying concerns of supply disruption, and after drought and freezing weather damaged the US crop. Futures in Chicago climbed as much as 3.4% to $7.405 a bushel.

Inflection Point

“What we’re see seeing now is these geopolitical issues become widespread concerns,” Peter Sorrentino, a senior portfolio manager who helps manage about $3.8 billion at Huntington Funds in Cincinnati, said by phone. “We’re at the inflection point of the market.”

The MSCI Emerging Markets Index lost 0.4%, declining for the first time in three days. Russia’s Micex Index retreated 0.5%. The Ukrainian Equities Index slid 3.9%, falling for a sixth day in the longest losing streak this year.

Government troops were in heavy fighting in Slovyansk, Interfax reported. Ukraine sent special forces from Kiev to Odessa after dismissing the local police for possibly criminal actions related to a deadly fire there, interior minister Arsen Avakov said on his Facebook account.

Lira, Stocks

Turkey’s lira gained 0.2% against the dollar, advancing for an eighth day in the longest rally in four years, after inflation jumped more than forecast. The benchmark index of stocks lost 0.5% after closing at the highest level since November.

The Hang Seng China Enterprises Index of mainland shares retreated 0.6%, closing at the lowest level since March. The China purchasing managers’ index from HSBC Holdings Plc and Markit Economics Ltd. was 48.1 in April, lower than the preliminary reading of 48.3 and missing the 48.4 projected by economists.

Markets in the UK, Japan and South Korea were closed on Monday.

Portugal’s bonds rose after Prime Minister Pedro Passos Coelho said the nation’s finances were strong enough to exit its bailout programme without a precautionary credit line. Yields on Portugal’s five-year bonds fell four basis points to 2.45%. Bloomberg

Volodymyr Verbyany in Kiev, Emma O’Brien in Wellington, Phoebe Sedgman in Melbourne, Paul Dobson and Will Hadfield in London, Corinne Gretler in Zurich, Jonathan Burgos and James Poole in Singapore and Nick Gentle in Hong Kong also contributed to this story.