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Stocks fell for the first time in six days and most commodities declined as worse-than-expected Chinese trade and French industrial output data added to evidence that the global economy is slowing. The euro weakened, while U.S. Treasuries gained and corn rose to an all-time high.
The MSCI All-Country World Index (MXWD) dropped 0.6 percent at 9:31 a.m. in New York and the Standard & Poor’s 500 Index slipped 0.4 percent. The yield on the 10-year Treasury fell five basis points to 1.64 percent. The dollar strengthened against all but one of its 16 major peers, while the euro was on course for its first weekly decline in three. Copper lost 1.3 percent and oil fell 1.4 percent.
China’s exports increased 1 percent in July from a year earlier, missing all estimates in a Bloomberg survey of 32 economists, and French industrial output stagnated in June from May compared with a forecast of 0.1 percent growth, reports showed today. The International Energy Agency cut global oil demand forecasts for this year and next. The U.S. Department of Agriculture lowered its domestic corn-crop outlook to a six-year low today as the country faces its worst drought since 1956.
“Whilst markets have recently been rallying on bad news -- in the expectation that it will lead to further stimulus from the central banks -- the deterioration in the fundamentals is becoming a bit harder to ignore,” said Jonathan Sudaria, a trader at Capital Spreads in London. “Traders may be disappointed if their thirst for stimulus isn’t satiated as soon as they expect.”
The Stoxx Europe 600 Index (SXXP) slipped 0.5 percent, trimming this week’s advance to 1.3 percent. The gauge has climbed for 10 straight weeks, the longest winning streak since January 2006. Hannover Re, the world’s fourth-biggest reinsurer, dropped 3.1 percent as second-quarter profit declined 13 percent because of unrealized losses on investments.
The S&P 500 snapped a five-day rally that has driven the index to the highest level since May 1. Yahoo! Inc. retreated. Chief Executive Officer Marissa Mayer has embarked on a strategy review that could mean the company alters plans to return to shareholders the proceeds from the sale of Yahoo’s stake in Alibaba Group Holding Ltd., Yahoo said late yesterday in a regulatory filing.
Research In Motion Ltd. (RIMM) climbed as two people familiar with the situation said the company’s enterprise-services unit has attracted the interest of International Business Machines Corp. No party has shown interest in buying all of RIM or the division that makes its phones and no talks are currently under way, said one of the people, who asked not to be named because the matter is private.
The 10-year U.S. yield climbed to 1.73 percent yesterday, surpassing the U.S. inflation rate and offering investors a so- called positive real yield for the first time in 14 months.
The yield on the German 10-year bund declined five basis points to 1.38 percent, with similar-maturity U.K. gilt rates dropped eight basis points to 1.54 percent. The yield on the Greek bond due in February 2023 jumped 21 basis points, climbing for the first time in five days, with the price falling to 19.78 percent of face value.
The cost of insuring against default on sovereign debt rose, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing five basis points to 246.5.
The euro weakened 0.3 percent to $1.2264, and dropped 0.6 percent versus the yen. The yen appreciated versus all its major peers, while South Africa’s rand declined against its 16 most actively traded counterparts.
Oil dropped to $91.93 a barrel and natural gas sank 3.1 percent, leading a 1 percent decline in the S&P GSCI Index of commodities. Wheat, soybeans and corn have risen the most this year among the 24 commodities tracked by the measure as the drought parched fields across the U.S. Midwest.
The MSCI Emerging Markets Index lost 0.4 percent, paring its biggest weekly gain since February. The Hang Seng China Enterprises Index of mainland companies slid 0.6 percent. Russia’s Micex Index dropped 1.4 percent.
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