Crude Drops, Dollar Gains Before Data; Europe Stocks Rise
Brent crude slipped 0.7 percent by 8:21 a.m. in London, a fourth straight decline. The greenback was at 120.29 yen and the Bloomberg Dollar Spot Index added 0.2 percent. The Stoxx Europe 600 Index climbed 0.9 percent and Standard & Poor’s 500 Index futures fluctuated. The Shanghai Composite Index traded between a gain of as much as 2.7 percent and a drop of 3 percent. Italian, Spanish and German bonds climbed. Russia’s ruble strengthened 1.7 percent.
Investors are awaiting today’s U.S. payrolls report for signals as to the timing of possible Federal Reserve interest-rate increases. German factory orders surged 2.5 percent in October versus an estimate for 0.5 percent growth. Economic-growth figures for the euro region are due after the European Central Bank yesterday failed to expand monetary stimulus.
“It’s hard to imagine a weak payrolls report, so the risk for dollar-yen is slanted to the upside,” said Takako Masai, general manager of the markets sub-group at Shinsei Bank Ltd. in Tokyo. “The market is pricing in the potential for a further expansion of monetary stimulus by the Bank of Japan. The dollar may race up to 130 yen by around the end of March.”
Taiwan and the Philippines report on inflation today, while Malaysia posts trade data. Markets in Thailand are closed for a holiday.
Yen Slide
Today’s data may show U.S. employers added more than 200,000 jobs in November for the 10th straight month, while the jobless rate held at the lowest level since July 2008. Fewer Americans filed applications for unemployment benefits last week, data yesterday showed, as employers retained staff to meet demand for goods and services ahead of the holiday season.
The dollar was 0.4 stronger versus the yen, rising to 120.33, the highest since July 2007.
The Bloomberg index tracking the greenback against its 10 most-traded peers is at a five-year high as monetary policy in the world’s largest economy diverges from that of Europe, Japan and China. The U.S. currency traded at $1.2373 per euro after climbing to $1.2280 yesterday, the strongest since August 2012. The dollar climbed 0.2 percent against the British pound and New Zealand dollar.
The ruble climbed to 53.3420 versus the dollar, paring its decline since Nov. 28 to 5.8 percent. The Bank of Russia intervened in the currency market for the second time since moving to a free float last month, according to a statement on its website today. Policy makers sold $1.9 billion of foreign currency on Dec. 3 and $700 million on Dec. 1, the data show.
Saudi Discount
Malaysia’s ringgit fell 0.7 percent to 3.4710 per dollar, a five-year low, as retreating crude prices damped the net oil-exporting nation’s growth outlook.
Brent for January settlement slid as much as 52 cents to $69.12 a barrel on the London-based ICE Futures Europe exchange before trading at $69.19. The contract lost 28 cents to $69.64 yesterday, the lowest close since May 2010. West Texas Intermediate crude dropped 0.7 percent to $66.38 a barrel.
State-run Saudi Arabian Oil Co. cut its differential for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement. That’s the lowest in at least 14 years. The kingdom doesn’t want to subsidize Iran, Iraq and Venezuela and is willing to let the market decide prices, said Daniel Yergin, an energy analyst and Pulitzer Prize-winning author.
The S&P 500 pared a drop of as much as 0.6 percent, ending the U.S. day down 0.1 percent with the Dow Jones Industrial Average after Bloomberg News reported that the ECB’s Governing Council expected to be considering a proposal for a broad-based asset-buying program, including sovereign debt, in January.
Stoxx 600
All but one of the 19 industry groups on the Stoxx 600 advanced today. German factory orders, adjusted for seasonal swings and inflation, climbed after a revised increase of 1.1 percent in September, data from the Economy Ministry in Berlin showed today. Orders grew 2.4 percent from a year earlier.
A report at 11 a.m. from the European Union’s statistics office in Luxembourg may show third-quarter gross domestic product in the euro region grew 0.2 percent from the previous three months, according to economists’ estimates compiled by Bloomberg.
Hong Kong’s Hang Seng Index climbed 0.7 percent, erasing a weekly decline, while the Hang Seng China Enterprises Index advanced 1 percent after gaining 9.9 percent in the nine trading days from the close on Nov. 21 through yesterday.
The Shanghai Composite Index closed 1.3 percent higher today after jumping 4.3 percent to 2,899.46 yesterday, the biggest increase since Dec. 14, 2012. A 19 percent surge for the Shanghai index over the past month is tying up funds and damping speculation the central bank will ease monetary policy.
China’s share market “is becoming very speculative,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment, which oversees about $120 million. “The market will be in for a very wild up-and-down next week.”
China’s bonds tumbled, lifting the 10-year yield by the most in 12 months, and the benchmark interest-rate swap was headed for the biggest weekly jump since June 2013. The yield on government debt due September 2024 jumped 12 basis points to 3.80 percent.
Swap Rate
The one-year swap contract, the fixed payment to receive the floating seven-day repurchase rate, surged 41 basis points this week to 3.26 percent as of 9:48 a.m. in Shanghai, according to data compiled by Bloomberg. It rose 13 basis points today.
“The much awaited loosening among bond investors may not come soon because of the booming stock market,” Shanghai-based analysts led by Chen Kang at Shenyin Wanguo Securities Co. wrote in a note today. “We doubt the central bank will pour oil on the flames.”
Australian government bonds rallied amid speculation the central bank will cut interest rates from a record low 2.5 percent next year. The yield on five-year notes dropped as much as 11 basis points to 2.42 percent, the lowest since September 2012. The yield on benchmark 10-year securities fell five basis points to 3.02 percent.
A gauge of Australian construction industry performance fell by the most since 2008 in November, according to data compiled by Bloomberg.
OTHERS
China unleashes stimulus package to revive economy, markets
Russia-EU Trade Grows for First Time Since November 2023
Gold At Record High for 3rd Time in US Rate Cut Week, Stalks Major $3,000 Target
Long-term rise of yuan intact despite challenges
Việt Nam records trade surplus of US$2.4 billion with the Philippines