Bloomberg News

U.S. Stocks Halt Global Rout as Treasuries Gain; Dollar Weakens

August 20, 2013

Asian Stocks to Aussie Bonds Drop as Ringgit Slides; Metals Rise

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney. QBE Insurance Group Ltd. helped drive Australian shares down 0.9 percent after profit fell. Photographer: Ian Waldie/Bloomberg

U.S. stocks rose, snapping a four-day slump and halting a global slide, as retailers gained after reporting better-than-estimated earnings. Ten-year Treasury yields retreated from the highest levels since 2011 and the dollar weakened.

The Standard & Poor’s 500 Index added 0.4 percent to 1,652.35 by 4 p.m. in New York, rebounding from a six-week low as more than four stocks gained for each that fell. The MSCI All-Country World Index slipped 0.2 percent, paring a drop of as much as 0.7 percent, while the Stoxx Europe 600 Index slid 0.8 percent and the MSCI Emerging Markets Index tumbled 1.4 percent. Ten-year Treasury yields slid 6.4 basis points to 2.82 percent while oil slipped 2 percent. The Bloomberg U.S. Dollar Index retreated 0.3 percent, snapping a two-day advance.

Best Buy Co., Urban Outfitters Inc. and TJX Cos. led gains in the S&P 500 after earnings beat estimates. Investors withdrew $8.4 billion from emerging-market exchange-traded funds this year as weakening economies from India to Indonesia fueled pessimism in markets already concerned the Federal Reserve will start cutting bond purchases in September. The central bank publishes minutes of its July meeting tomorrow.

“We had some pretty good retail earnings, it just shows the consumer is not dead and that things are moving in the right direction,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a phone interview. His firm manages about $1.7 billion. “Everyone is still focused on Fed tapering. We remain cautiously bullish with pretty full exposure to stocks.”

Market Movers

Benefits of more bond purchases “are likely to be negligible,” Richmond Fed President Jeffrey Lacker said in an interview in Richmond Times-Dispatch newspaper Aug. 18.

Retailers in the S&P 500 rallied 1.2 percent as a group as 28 of 32 companies advanced. Best Buy jumped 13 percent after posting results that exceeded projections and its largest quarterly profit in more than two years. J.C. Penney Co. added 6 percent amid signs the company’s sales slide is slowing and after Bloomberg News reported that a person familiar with the matter said hedge-fund manager J. Kyle Bass is betting on a comeback by the company in credit markets.

Urban Outfitters jumped 8.2 percent after earnings-per-share beat estimates by 6.7 percent and Wedbush Securities Inc. raised its rating on the stock. Zillow Inc. (Z:US) dropped 4.8 percent after the operator of the largest U.S. real-estate website announced a share sale.

About four shares declined for each that advanced in the Stoxx 600. CRH Plc (CRH) sank 2.2 percent in London after the cement maker cut its second-half earnings guidance, citing weak demand from the euro region. HeidelbergCement AG lost 2.5 percent. John Wood Group Plc, a U.K. oil-services provider active in Africa and the Middle East, tumbled 8 percent after cutting the profit outlook at its engineering division.

European Movers

Glencore Xstrata Plc dropped 1.6 percent in London trading after writing down $7.7 billion of assets acquired in the Xstrata Plc takeover three months ago. GSW Immobilien AG rallied 6.3 percent in Frankfurt after Deutsche Wohnen AG offered to buy Berlin’s biggest publicly traded residential landlord in an all-share transaction. Deutsche Wohnen fell 4.7 percent.

The MSCI Emerging Markets Index fell for a fourth day and reached the lowest level since July 10. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 2.9 percent. Benchmark gauges in Brazil, South Korea, Malaysia and Thailand dropped at least 1.5 percent.

Emerging Markets

Brazil’s Ibovespa fell for the first time in 10 days, snapping its longest rally since August 2010, as commodity producers tumbled.

The Jakarta Composite Index sank 3.2 percent, extending a four-day slide to 11 percent. Indonesia’s current-account deficit widened to a record last quarter and the economy grew less than 6 percent for the first time since 2010 in the second quarter, data showed this month.

The S&P GSCI (SPGSCI) gauge of 24 commodities lost 0.6 percent as West Texas Intermediate oil declined to $104.96 a barrel. Brent crude added 0.2 percent to $110.15. Soybeans fell 1 percent and corn dropped 2.1 percent on prospects for bigger crop harvests this year.

Treasury yields retreated after reaching almost 2.90 percent yesterday, the highest level since July 2011.

Price swings as measured by the Merrill Lynch Option Volatility Estimate MOVE Index climbed to 99.48 yesterday, the highest level since July 9. The average for 2013 is 68.

Yen Rebounds

The yen strengthened for the first time in three days against the dollar on increased demand for the relative safety of the Japanese currency. The yen appreciated 0.3 percent to 97.26 per dollar. The euro added 0.6 percent to $1.3420.

Australia’s dollar fell for a second day, following its biggest drop this month, after the central bank said the currency’s direction will be important in determining policy. New Zealand’s dollar tumbled 1.1 percent against the dollar after the country’s central bank chief said it will impose bank lending restrictions, reducing the need for interest-rate increases. Norway’s krone slid as a report showed the economy expanded less than analysts estimated in the second quarter.

Australia’s currency dropped 0.4 percent to 90.72 U.S. cents. New Zealand’s dollar slid to 79.8 U.S. cents.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • Z
    (Zillow Inc)
    • $104.6 USD
    • -0.17
    • -0.16%
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