Stocks fall before earnings as euro weakens, commodities decline

Euro Retreats

The euro depreciated 0.9 percent to 101.62 yen and weakened 0.6 percent to $1.2973. Ministers from all 27 nations in the European Union meet tomorrow while Spanish Prime Minister Mariano Rajoy will travel to Paris on Oct. 10 for talks with French President Francois Hollande.

The rand weakened as much as 2.4 percent to 8.9942 per dollar, the lowest level since April 2009, as strikes in South Africa’s mining and transportation industries spread to other sectors of the economy.

The yield on Germany’s 10-year bond fell five basis points to less than 1.48 percent. The nation’s industrial production in August declined 0.5 percent from July, the Economy Ministry in Berlin said today. Economists had forecast a drop of 0.6 percent, according to a Bloomberg News survey.

China’s yuan climbed to 6.2812 per dollar, the strongest level since the nation unified official and market exchange rates at the end of 1993, before closing 0.04 percent lower at 6.2872, according to the China Foreign Exchange Trade System. Today’s high exceeded the central bank’s reference rate by a record 0.98 percent, near to the maximum 1 percent divergence that is permitted.

The Shanghai Composite Index dropped 0.6 percent as data signaling slowing growth outweighed an increase in tourism sales during the so-called Golden Week holiday that ended Oct. 5.

‘Incredible Counterweight’

“During the previous crisis back in 2009, China acted as an incredible counterweight to the western difficulties with this huge infrastructure boost,” said Stephen King, chief economist at HSBC Holdings Plc. “We’re not seeing this same kind of boost from China this time around. Everyone exposed to southern Europe is not benefiting from a China boom and that’s really hitting world trade.”

Silver slid 1.6 percent, while gold futures declined 0.3 percent to $1,775.70 an ounce. Futures for gasoline fell 2 percent to $2.8931 a gallon.

Oil in New York slipped 0.6 percent to $89.33 a barrel and reached a a $22.49-a-barrel discount to Brent, the European benchmark. The spread, the widest since Oct. 20, 2011, has widened on signs that supply in the U.S. is exceeding demand.

The premium for California-blend gasoline, or Carbob, fell by more than half after Governor Jerry Brown directed state regulators to let refineries make winter-blend fuel. The California Air Resources Board granted refineries permission yesterday to make an early shift to the winter blend, typically not sold until after Oct. 31. The winter blend is easier to make.

The premium for California-blend gasoline in Los Angeles versus futures on the New York Mercantile Exchange, lost 42.5 cents to 37.5 cents at 1:36 p.m. in New York, according to data compiled by Bloomberg. The same fuel in San Francisco slumped 42.5 cents to 30.5 cents a gallon above futures.

Bloomberg News

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