Stocks Fall on Concern U.S. Economy Slowing
Pedestrians are reflected in an electronic stock board in Tokyo, Japan, on Tuesday, Aug. 31, 2010. Photographer: Tomohiro Ohsumi/Bloomberg
Aug. 31 (Bloomberg) -- Michael Dicks, head of economic research at Barclays Wealth, talks about his investment strategy and the global economic recovery. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Shaun Osborne, chief currency strategist at TD Securities Inc., talks about the outlook for the dollar-yen exchange rate. Osborne speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Thio Chin Loo, a senior currency analyst at BNP Paribas SA, talks about the options available to Japanese policymakers to curb the advance of the yen. She speaks from Singapore wiith Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)
Stocks fell for a second day, heading for the worst month since May, and U.S. index futures dropped on concern economic reports today will add to evidence the recovery is flagging. Treasuries and bunds gained, while the Swiss franc strengthened to a record against the euro.
The MSCI World Index slipped 0.8 percent at 7:24 a.m. in London, extending this month’s decline to 4.4 percent. Standard & Poor’s 500 Index futures decreased 0.6 percent. The 10-year Treasury yield lost 3 basis points to 2.51 percent, and the German bund yield slid 2 basis points to 2.11 percent. The Swiss franc appreciated against all 16 of its major peers. Oil retreated for a second day and corn fell 1.2 percent.
Consumer confidence in the U.S. probably stagnated near a five-month low this month, a Conference Board report may show today, a day after slower-than-forecast growth in personal incomes fueled speculation the recovery is losing momentum. More than $2 trillion has been wiped off the value of global equities since the Federal Reserve said Aug. 10 that the pace of U.S. economic recovery will likely be “more modest” than forecast.
“The past couple of weeks have been clouded by talk of a double-dip recession,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Until we get some macro news that is more consistent, these markets are going to be a bit choppy.”
The Stoxx Europe 600 Index lost 1 percent as six shares fell for every one that advanced. Industries most tied to economic growth, such as automakers and banks, led the retreat. PSA Peugeot Citroen, Europe’s second-largest carmaker, slid 1.8 percent and Banco Santander SA, Spain’s biggest lender, dropped 2 percent. The MSCI Asia Pacific Index sank 1.7 percent.
Sentiment, House Prices
The decline in U.S. futures indicated the S&P will extend yesterday’s 1.5 percent loss. The New York-based Conference Board may say its consumer sentiment gauge was little changed at 50.7 in August, from 50.4 the prior month, according to the median of 68 estimates in a Bloomberg survey.
Data from S&P/Case-Shiller may show property values in 20 U.S. cities rose 3.5 percent in June from the same month last year, down from a 4.6 percent gain in May, a Bloomberg survey showed. The Fed is also due to release minutes of its meeting Aug. 10, when it decided to maintain holdings of government securities to stop money draining from the financial system.
German government bonds were headed for their best month since November 2008, rallying 3.8 percent, according to indexes compiled by Bank of America Corp.’s Merrill Lynch unit. U.S. notes returned 1.7 percent, while U.K. gilts earned 4.2 percent.
Franc, Yen
The Swiss franc strengthened as much as 0.7 percent to 1.2900 per euro. The yen rose against all its peers except the franc, appreciating 0.4 percent to 84.31 per dollar, within 0.61 yen of a 15-year low reached on Aug. 24.
The New Zealand dollar weakened against all of its 16 major counterparts after South Canterbury Finance Ltd., a lender to small businesses and farms, filed for receivership. The so- called kiwi declined 1 percent to 70 U.S. cents after the government said it would repay all the bank’s depositors in the country’s biggest bailout under its state guarantee program.
October crude oil fell 1.5 percent to $73.56 a barrel on the New York Mercantile Exchange. The S&P GSCI Total Return index of 24 commodities dropped 1 percent, the biggest decline in a week. Corn for December delivery slipped to $4.3625 a bushel on the Chicago Board of Trade.
The MSCI Emerging Markets Index lost 1 percent, ending a three-day advance. Benchmark indexes in Russia, Poland, the Czech Republic, South Africa and Taiwan retreated more than 1 percent as oil and copper prices fell. The Hungarian forint slid 0.6 percent to the weakest level in a month against the euro as the strength of the Swiss franc fueled concern loan defaults will rise.
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