The euro weakened as European Central Bank policy makers prepared to meet tomorrow amid renewed concern the debt crisis will worsen. U.S. stocks fluctuate while Treasuries gained.
The euro depreciated 0.4 percent to $1.3524 at 3:48 p.m. in New York, while the dollar gained versus 14 of 16 major peers. The Standard & Poor’s 500 Index was little changed after erasing an early 0.4 percent drop. The 10-year Treasury yield fell three basis points to 1.96 percent and the rate on German bunds lost two points to 1.63 percent. Russia’s 2027 ruble bonds snapped a seven-day slide on plans to open the market to foreign investors. Oil reversed a 1.7 percent drop.
ECB President Mario Draghi will head a meeting of policy makers meet tomorrow in Frankfurt as euro-area leaders gather for a summit in Brussels. The euro has retreated from a 14-month high against the dollar reached on Feb. 1 as Spain’s premier faced opposition calls to resign. Stocks and U.S. equity-index futures gained earlier today as company earnings from ArcelorMittal to Walt Disney Co. beat estimates.
“It feels like we’re starting a rotation of worry back to Europe again,” Sandy Lincoln, the Chicago-based chief market strategist in the U.S. with BMO Global Asset Management, which oversees about $120 billion, said in a telephone interview. “This is a very fragile environment so whenever you have glass that’s out there that can break easily, people get themselves concerned.”
The euro slipped against 13 of its 16 major counterparts, losing 0.8 percent versus the yen. Australia’s dollar slid against 15 of 16 peers after retail sales unexpectedly dropped for a third month. The JPMorgan G7 Volatility Index, calculated based on premiums on currency options, climbed as high as 9.6 percent, the most since July 25.
The 17-nation euro also slid as Spain’s premier resisted opposition calls to resign and Italy’s Banca Monte dei Paschi di Siena SpA faced criminal probes over losses it hid in 2008 and 2009 using derivatives, while Greece’s finance minister said the shared currency’s strength is a concern. The shared currency last week reached the strongest level since 2011.
The ECB “is not only governing a region which is still struggling to achieve growth but also has to cope with a currency which is at risk of becoming too strong,” Adrian van Tiggelen, senior investment specialist in The Hague at ING Investment Management, which oversees more than $400 billion, said in a note today. “If this trend continues the ECB may be forced to lower interest rates even further and, or, make a less conservative use of the printing press.”
The S&P 500 swung between gains and losses today after climbing 1 percent yesterday, its biggest gain in more than a month. Health-care, technology and energy companies led declines among the 10 main groups in the S&P 500. Apple Inc. was little changed after climbing as much as 1.9 percent amid speculation the company will return more cash to shareholders. Legg Mason Inc. fund manager Bill Miller told the Financial Times the stock may be worth 50 percent more than its current price if the company puts future free cash flow into its dividend.
Walt Disney Co., the largest entertainment company, advanced 0.8 percent as earnings topped estimates and the interactive unit reported its first profit while new theme-park attractions drew more tourists. Zynga Inc. rallied 11 percent after the biggest maker of online social games reported fourth- quarter profit and sales that surpassed projections as it cut costs. Time Warner Inc. gained 4.5 percent after earnings beat estimates on gains in fees paid by satellite and cable companies.
Twenty-four companies in the S&P 500 are due to release results today. Earnings per share have topped the average analyst estimate at about 74 percent of companies in the index that have posted results so far in the reporting season, according to data compiled by Bloomberg.
Royal Imtech NV, the Dutch provider of infrastructure for stadiums whose shares sank 48 percent on Feb. 4 after predicting writedowns exceeding 100 million euros ($136 million), dropped 9.5 percent as the chief executive officer and chief financial officer of Imtech Deutschland left.
ArcelorMittal, the world’s biggest steelmaker, rose 1.1 percent after earnings beat estimates. Hargreaves Lansdown Plc rallied 11 percent as earnings at the U.K.’s largest retail broker also topped estimates. ICAP Plc, the world’s biggest broker of transactions between banks, surged 5.3 percent.
Japan’s Nikkei 225 Stock Average climbed 3.8 percent to the highest close since September 2008 as Toyota Motor Corp. raised its profit forecast.
The yield on Russia’s ruble bonds maturing in February 2027 declined three basis points to 7.06 percent. Euroclear Bank SA said it will start direct settlement of ruble-denominated government debt tomorrow, opening the $100 billion so-called OFZ market to foreign investors.
The MSCI Emerging Markets Index slid 0.5 percent. Malaysia’s benchmark gauge dropped 1.2 percent as speculation mounted the government will dissolve parliament for elections. The Shanghai Composite Index added less than 0.1 percent, while Brazil’s Bovespa gauge slipped 0.9 percent, Russia’s Micex Index was little changed and India’s Sensex lost 0.1 percent.
Oil fluctuated below $97 a barrel, reversing an earlier 1.7 percent slump. The S&P GSCI Index trimmed earlier losses to trade little changed. Platinum rose as much as 1.7 percent to $1,739.37 an ounce, the highest price since September 2001 on a closing basis.
U.S. natural gas futures rose as much as 1.8 as forecasters including Commodity Weather Group LLC said below-normal temperatures will sweep into parts of the U.S. Midwest in the next 11 to 15 days. Lumber climbed to a one-month high in Chicago, rising the one-day limit of $10, on mounting speculation that new construction in China is boosting demand for imported wood.