Stocks, Commodities Drop, Dollar Gains on Google Profit, China
By David Merritt
April 16 (Bloomberg) -- Stocks fell, sending a gauge of emerging market equities down the most in two months, and commodities retreated after Google Inc.’s results disappointed investors and China acted to cool real-estate speculation.
The Standard & Poor’s 500 Index lost 0.5 percent to 1,206.04 at 9:54 a.m. in New York, halting a six-day rally. The MSCI Emerging Markets Index dropped 0.8 percent. The Shanghai Stock Exchange Composite Index slid 1.2 percent, its biggest drop on a closing basis since Feb. 5. The dollar gained against 13 of 16 major currencies and the yen rose against all 16.
Google tumbled 5 percent after missing some analysts’ profit estimates on costs to pursue growth in new markets. The S&P 500 retreated from an 18-month high on concern an 8.7 percent rally this year through yesterday wasn’t justified by prospects for earnings as central banks start to withdraw stimulus measures. China today raised requirements for down- payments on some home purchases, while a gauge of U.S. consumer confidence unexpectedly declined.
“Risk has been sold heavily after Google’s results fell short of expectations,” said Adam Cole, head of global currency strategy at Royal Bank of Canada in London. “Speculation on an imminent policy tightening in China is ongoing and further diminishing appetite for risky assets and currencies.”
The Shanghai Composite’s decline was the biggest in three weeks. China Overseas Land & Investment Ltd., controlled by the country’s construction ministry, lost 4.8 percent in Hong Kong. Thailand’s SET Index retreated 3.3 percent to its lowest level in a month after the government said the nation’s deadliest political clash in 20 years may hurt growth.
Volcano Disruption
The MSCI World Index of 23 developed nations’ stocks fell 0.4 percent and the MSCI Asia Pacific Index declined 0.7 percent, retreating from a 20-month high. Sony Corp., which gets 23 percent of its sales in the U.S., sank 1.8 percent in Tokyo.
British Airways Plc dropped 2 percent in London while Air France-KLM Group lost 1.5 percent in Paris as a cloud of ash from a volcano in Iceland shut airports in northern Europe for a second day. British airspace will be restricted until at least 1 a.m. London time tomorrow, according to flight-control authority National Air Traffic Services. Ten airports in Germany were shut, according to the DFS air traffic control agency.
South Africa’s rand led declines among emerging-market currencies, weakening 1.1 percent against the dollar, after the central bank approved easing rules that govern the ability of companies to enter into forward-exchange contracts to hedge against currency risk.
Yen, Dollar, Pound
The yen appreciated 0.9 percent against the euro to trade at its strongest level since April 8 and strengthened 0.4 percent versus the dollar. The dollar advanced 0.5 percent against the euro.
The pound fell 0.4 percent versus the dollar, its first drop in four days, as polls on the U.K.’s first televised campaign debate signaled neither of the biggest parties has enough support for a clear majority at the May election.
Greece’s 10-year bonds fell for a fourth day as the nation moved closer to asking for emergency aid to avoid a default, with European Union finance ministers meeting in Madrid today to discuss how to curb swelling budget deficits. The yield premium investors demand to hold the securities instead of benchmark German bunds widened 25 basis points to near an 11-year high.
Crude oil tumbled 1.9 percent to $83.93 a barrel in New York, while copper slipped 0.8 percent to $3.594 a pound.
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