May 23 (Bloomberg) -- The euro sank to an almost two-year low, while stocks and commodities tumbled, as European leaders prepared to meet in Brussels amid concern Greece will exit the currency union. The yen and dollar strengthened while German bunds and U.S. Treasuries rallied.
The euro weakened as much as 0.9 percent to $1.2570, the lowest since July 2010, as of 10:41 a.m. in New York. The MSCI All-Country World Index lost 2 percent for its biggest slide on a closing basis since March. The Standard & Poor’s 500 Index slid 1.3 percent. The yen appreciated against all 16 most-traded peers and the dollar rose versus all but the yen. The 30-year German bund yield dropped below 2 percent for the first time, while 10-year U.S. note yields lost six basis points to 1.71 percent. All 24 commodities tracked by the S&P GSCI Index fell.
European leaders are meeting today to discuss the region’s debt crisis after deepening concern Greece will exit the euro wiped about $4 trillion from equity markets worldwide this month. Japan’s exports in April trailed economists’ estimates, underscoring the risk that weakness in global demand may limit a rebound in the world’s third-biggest economy. Purchases of new homes probably rose in April, economists said before a Commerce Department report today.
“Conditions remain very fragile,” said Daphne Roth, the head of Asian-equity research at ABN Amro Private Banking in Singapore, which manages about $217 billion for clients globally. “There is a strong likelihood that Greece might exit the euro zone. Even if it stays, going forward there will be a lot of volatility,” she said in a Bloomberg Television interview.
The S&P 500 dropped for the first time in three days. Dell Inc. tumbled 15 percent after the world’s third-largest maker of personal computers forecast fiscal second-quarter revenue that missed analysts’ estimates. Hewlett-Packard Co., Microsoft Corp. and Intel Corp. fell more than 2.8 percent to lead losses in 29 of 30 stocks in the Dow Jones Industrial Average.
Equities maintained losses even after a U.S. government report showed new-home sales exceeded economists’ forecasts. Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported. The median forecast in a Bloomberg News survey of economists was 335,000. Data released yesterday showed sales of existing homes rose in April in every region.
The U.S. economy will probably tip back into recession next year if Congress doesn’t address an impending “fiscal cliff,” the Congressional Budget Office said yesterday.
The Stoxx Europe 600 Index sank 1.5 percent, snapping a two-day, 2.5 percent rally. Rio Tinto Group and Vedanta Resources Plc led a retreat in mining companies. London Stock Exchange Group Plc tumbled 7 percent, the most since 2009 on a closing basis, after UniCredit SpA and Intesa Sanpaolo SpA sold a combined 11.5 percent stake. Burberry Group Plc slid 2.1 percent as the U.K.’s largest luxury-goods company said profitability may decline in the fiscal first half.
The dollar strengthened all 16 major peers except the yen, with the euro weakening 0.8 percent to $1.2584. The Dollar Index, which tracks the U.S. currency against those of six trading partners, rose 0.7 percent, climbing to a 20-month high. The pound declined 0.4 percent to $1.5705 as a report showed U.K. retail sales fell the most in more than two years in April.
The yen appreciated 0.7 percent against the dollar and 1.4 percent versus the euro. Japanese Finance Minister Jun Azumi called on the central bank to further ease policy moments before the Bank of Japan refrained from adding monetary stimulus.
“The BOJ must firmly pursue monetary easing to achieve its 1 percent inflation goal,” Azumi told lawmakers in parliament in Tokyo today. The central bank left its asset-purchase and credit-loan programs unchanged, as anticipated by all 14 economists surveyed by Bloomberg News.
The yield on the 10-year U.S. Treasury note fell five basis points to 1.72 percent before the government sells $35 billion of five-year notes.
Bunds rallied as Germany, the only country in the euro area with a stable outlook on its AAA rating, sold 4.56 billion euros ($5.8 billion) of two-year securities carrying a zero-percent coupon for the first time, Bundesbank data showed today. The notes were sold to yield 0.07 percent. The country offered a fixed interest payment of 0.25 percent when selling similar- maturity notes on April 18.
Oil declined 1 percent to $90.71 a barrel in New York and Brent crude fell for a second day in London after Iran agreed to grant access to United Nations nuclear inspectors ahead of an international summit in Baghdad today. The deal gives the International Atomic Energy Agency access to the nation’s Parchin military complex, IAEA head Yukiya Amano said yesterday.
The S&P GSCI gauge of 24 commodities slumped 1.5 percent to the lowest since Dec. 16 as silver, coffee and copper lost more than 2.7 percent to lead declines.
The MSCI Emerging Markets Index tumbled 2.5 percent, the most on a closing basis since November. Utilities helped drag Russia’s Micex Index 3.4 percent lower as President Vladimir Putin added companies to a list of strategic assets that precludes their privatization. Benchmark gauges in Turkey and Hungary dropped more than 2.3 percent, while equity indexes in Taiwan and Poland retreated at least 1.8 percent.