gm forum cats...greenbacks lookin good...Stocks, Commodities Retreat; Dollar, Treasuries Rise on Kudrin
Share | Email | Print | A A A
By Daniel Hauck
June 15 (Bloomberg) -- Stocks fell, sending the MSCI World Index lower for a second day, and commodities dropped after the Group of Eight finance ministers signaled they may start to withdraw stimulus spending. The dollar rose as Finance Minister Alexei Kudrin said Russia has confidence in the U.S. currency.
The MSCI index of 23 developed nations slid 1 percent at 12:10 p.m. in London, led by raw-materials producers. Futures on the Standard & Poor’s 500 Index decreased 1.3 percent and Russia’s Micex Index slumped 4.3 percent. Oil declined as much as 1.9 percent in New York, while copper tumbled 3.2 percent in London. The dollar strengthened 1.1 percent against the euro and Treasuries climbed for a third day.
Group of Eight finance ministers meeting in Lecce, Italy, this weekend began planning to reduce budget deficits after signs of economic recovery sent the MSCI to a three-month, 43 percent gain and spurred concern that inflation will accelerate. Kudrin’s support for the dollar echoed that of Japanese Finance Minister Kaoru Yosano, who said last week that his government is confident in Treasuries.
“At some point, governments will have to map out their exit strategy in a coordinated fashion,” said David Keeble, the London-based head of fixed income strategy at Calyon. “But that won’t happen until at least next year.”
MSCI Rebound
The MSCI has rebounded from a 13-year low in March on speculation the $12.8 trillion pledged by the U.S. government and Federal Reserve will end the deepest economic contraction since the Great Depression. The rally pushed the index’s value to 18.2 times the earnings of its 1,655 companies, the most expensive level since December 2004, weekly data compiled by Bloomberg show.
Europe’s Dow Jones Stoxx 600 Index slumped 1.4 percent today and trades at 25.4 times the earnings of its companies, the most in five years, weekly data show.
Melbourne-based BHP Billiton Ltd., the world’s largest mining company, lost 2 percent in London. The Hague-based Royal Dutch Shell Plc, Europe’s biggest energy producer, fell 2.6 percent. Chevron Corp. of San Ramon, California, the second- largest U.S. energy company, slid 2.1 percent in German trading.
Copper led declines on the London Metal Exchange on speculation stockpiles in China, the world’s largest consumer, may be excessive. The country’s stores are the highest since March 2008 after four consecutive monthly import records. Copper for delivery in three months fell 3.2 percent to $5,070 a metric ton. Aluminum dropped 1.8 percent to $1,615 a ton and nickel 3.9 percent to $15,080 a ton.
Micex, Lats Fall
The slump in commodity prices sent Russian shares lower. The Micex dropped 4.3 percent to 1,089.62, a level not seen since May 28. Steelmakers led the retreat, with OAO Novolipetsk falling 5.5 percent and OAO Severstal declining 5.3 percent.
The MSCI Emerging Markets Index, a benchmark for equities in 22 developing nations, sank 1.8 percent.
Latvia’s lats depreciated 0.9 percent, the biggest decline since February 2007, as the country attempts to obtain the next installment of a 7.5 billion euro ($10.4 billion) international bailout. Latvia’s recession, the deepest in the European Union, threatens Sweden’s banks, the biggest lenders in the Baltic region. The Swedish krona weakened 0.6 percent versus the euro.
The dollar rose against all 16 of the most traded currencies except for the yen. Kudrin said after the G-8 meeting that “it’s too early to speak of an alternative” to the world’s reserve currency.
Kudrin, Medvedev
The comments reassured investors after Kudrin’s boss, President Dmitry Medvedev, questioned the dollar’s global status, joining China’s central bank Governor Zhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.
Kudrin’s comments underscore the dependence of Brazil, China, Russia, and India on the currency of the U.S., the world’s largest economy and a $2.5 trillion export market. The four nations increased foreign reserves by more than $60 billion in May to limit their currencies’ gains and support their exports. They now have combined reserves of $2.8 trillion and are among the largest holders of Treasuries.
Oil and gold fell as the dollar strengthened. Crude declined as much as 1.9 percent to $70.71 a barrel on the New York Mercantile Exchange amid speculation last week’s rally to a seven-month high outpaced prospects for a recovery in fuel demand. Gold for immediate delivery retreated 0.7 percent to $932.58 an ounce, dropping for a fourth day, the longest stretch of declines since March.
Exit Strategies
G-8 officials said it’s prudent to consider what exit strategies to deploy once global growth is secured and asked the Washington-based International Monetary Fund to examine how to do so without reigniting the two-year financial crisis.
“Once exit strategies start to be implemented they will have a considerable impact on the currency market, as currencies most at risk from debasement fears have earned a reprieve,” Jennifer Underwood, a strategist at Europe Arab Bank Plc in London, wrote in a note. “The U.S. dollar so far has been one of the key beneficiaries.”
The yield on the 10-year Treasury fell four basis points to 3.75 percent. The two-year note yield slid six basis points to 1.21 percent. A basis point is 0.01 percentage point.
Britain plans to sell as much as 5 billion pounds ($8.2 billion) of bonds through banks as soon as tomorrow, according to the U.K. Debt Management Office. The debt office hired Barclays Plc, Goldman Sachs Group Inc., HSBC Holdings Plc and Royal Bank of Scotland Group Plc to offer the 4.50 percent gilt maturing in September 2034.
McLean, Virginia-based mortgage agency Freddie Mac began a tender offer to repurchase debt with a face value of 8.1 billion euros ($11.2 billion) today.
News 
Market Data 
Discover 
