Bloomberg News

Stocks, Commodities Drop as China Adds to Slowdown Proof

June 04, 2012

Stocks, Commodities Drop as China Adds to Evidence of Slowdown

Financial traders work on the floor of the Frankfurt Stock Exchange in Frankfurtsaid yesterday. European investor confidence weakened to a three-year low, the Sentix research institute said today. Photographer: Hannelore Foerster/Bloomberg

Global stocks and commodities fell, with Japanese and Chinese equity gauges tumbling into bear markets, after data from China added to evidence of a global economic slowdown. Italian 10-year bonds advanced.

The MSCI All-Country-World Index (XU100) dropped 0.4 percent by 9:50 a.m. in London and the Stoxx Europe 600 Index (SXXP) fell 0.6 percent after entering a bear market on June 1. Japan’s Topix Index declined 1.9 percent, the lowest since Dec. 13, 1983, and Hong Kong’s Hang Seng China Enterprises Index retreated 2.8 percent. Futures on the Standard & Poor’s 500 Index weakened 0.5 percent. Oil sank to the lowest in almost eight months and copper plunged to a five-month low. The Italian 10-year bond yield lost seven basis points to 5.80 percent.

China’s non-manufacturing purchasing managers’ index dropped to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. European investor confidence weakened to a three-year low, the Sentix research institute said today. U.S. factory orders were probably little changed in April, economists said before a Commerce Department report later today.

“People are more concerned about a return of their capital as opposed to a return on their capital,” said Nick Maroutsos, who oversees about $2.9 billion of assets as managing director and co-founder of Sydney-based Kapstream Capital. “The recovery is still going to continue to have fits and starts. We need something more substantial that’s going to get investors back into the market.”

Stoxx 600

The Stoxx 600 slipped, extending the gauge’s decline from this year’s high to 14 percent, as carmakers and chemical companies retreated. More than four stocks dropped for every one that climbed. Novartis AG and Nestle SA fell, making the greatest contribution to the Stoxx 600’s slide. The U.K., Irish and Greek markets are closed today for public holidays.

The decline in S&P 500 futures indicates the U.S. equity benchmark will slide for a fourth day. A Commerce Department report at 10 a.m. in Washington will show that factory orders climbed 0.2 percent in April, according to the median economist estimate in a Bloomberg survey. The measure slipped 1.9 percent in March.

The 17-nation euro depreciated 0.2 percent against the yen. Australia’s dollar fell 0.3 percent versus the greenback and dropped 0.4 percent against the Japanese currency before the nation’s central bank announces its interest-rate decision tomorrow. The Reserve Bank of Australia will cut its benchmark rate by a quarter percentage point to 3.50 percent, according to the median estimate of 27 analysts surveyed by Bloomberg.

Spanish Yields

The Spanish 10-year yield slipped two basis points, with the similar-maturity German bund yield rising two basis points to 1.19 percent, after the rate fell to a record 1.127 percent on June 1. The yield on the Greek bond due in February 2023 advanced eight basis points to 30.62 percent.

The yield on the 10-year U.S. Treasury note increased four basis points to 1.49 percent in Asia trading.

Oil futures dropped as much as 2.1 percent to $81.50 a barrel in New York, the lowest price for a most-active contract since Oct. 7. Copper in New York declined as much as 2.3 percent to $3.238 a pound, the lowest since Dec. 15. The London Metal Exchange is closed today for a holiday.

Hungary’s BUX Index (BUX) slumped for the first day in three, retreating 1.1 percent, and South Africa’s benchmark FTSE/JSE (JALSH) Africa All Shares Index declined 0.5 percent. Turkey’s ISE National 100 Index fell 0.2 percent.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net;

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net


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