JPMorgan sneezes, S&P 500 catches cold

Bonds and oil advance

Europe Stocks

In Europe, the Stoxx 600 sank 3.1 percent this week as investors speculated that equity gains have overshot the earnings outlook. Each of the 19 industry groups fell, with a gauge of technology stocks leading the decline after a 2.5 percent drop.

The broader gauge has more than doubled from a low in March 2009, with its price-to-earnings multiple rising to 14.4 times estimated earnings compared with a five-year average of 12.3 times.

“Markets seem to be on the back foot this week,” said Espen Furnes, who helps manage about $75 billion at Storebrand Asset Management in Oslo. “Not only are we seeing more volatility, we’re also seeing a certain sector rotation, specifically out of the higher-priced sectors like IT and consumer cyclicals.”

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, rose 3.1 percent after jumping 15 percent yesterday, the most since Feb.3. The CBOE NDX Volatility Index of Nasdaq 100 contracts climbed 4.2 percent after a 16 percent surge yesterday, the most since Jan. 24.

The MSCI Emerging Markets Index declined 0.8 percent, halting five days of gains and trimming this week’s advance to 1.1 percent, its fourth consecutive weekly gain. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 1.9 percent and the Shanghai Composite Index slid 0.2 percent.

The dollar was little changed at $1.3883 per euro, bringing this week’s decline to 1.3 percent. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, rose for the first time in six days, adding 0.1 percent. That trimmed the decline since April 4 to 1 percent, set for the biggest weekly slide since Sept. 20.

Dollar Buying

“It’s dollar-buying and yen-buying in a sign of market jitters,” Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, said in a phone interview. “More of the developed-market equity space is getting taken to the woodshed and sparked dollar- and yen-buying.”

Nickel rose for the 10th day, adding as much as 2.4 percent to $17,489 a metric ton, the highest since Feb. 20. Indonesia, the largest producer of the metal from mines, banned exports of ore nickel in January to encourage refining in the country.

Germany’s 10-year yield dropped below 1.50 percent, the first time since June 7. The rate on similar-maturity Italian bonds rose four basis points to 3.20 percent.

The yield on Greece’s 10-year bond jumped 35 basis points to 6.29 percent. The government sold 3 billion euros of notes due in April 2019 through banks yesterday at an average yield of 4.95 percent.

Minutes of the Federal Reserve’s March 18-19 meeting released this week damped speculation U.S. policy makers are moving toward raising interest rates.

A 0.5 percent rise in producer prices in March exceeded forecasts while also signaling the central bank still has room to keep its benchmark-interest-rate target at almost zero without spurring above-target inflation.

Treasuries headed for a weekly gain, with 10-year yields dropping the most in a month. Thirty-year yields sank to 3.48 percent, the lowest in nine months.

West Texas Intermediate crude climbed to a five-week high as U.S. consumer confidence rose in April and gasoline demand strengthened. Brent’s premium to WTI shrank to the narrowest since September.

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