Equities recover from downturn they didn't even know about

Quarter’s End

With the end of the quarter approaching, investors should expect about $20 billion in selling of equities and some buying of bonds as pension fund managers rebalance their portfolios, Boris Rjavinski, a strategist at UBS AG, estimated in a June 23 report.

Yields on 10-year Treasuries fell to a three-week low today while the dollar slumped as the GDP and durable-goods data raised questions about the pace of future interest-rate increases.

“A weak durable goods reading once again puts the cat among the pigeons in terms of the timing and the magnitude of any monetary tightening from the Federal Reserve,” Andrew Wilkinson, chief market analyst at Interactive Brokers LLC, said in a phone interview from Greenwich, Connecticut. “Short-term interest rates are likely to remain very, very low for quite some time, even after the Fed’s finished tapering.”

 

Treasury Auction

Treasuries remained higher after the U.S. sold $35 billion in five-year notes. The notes drew a yield of 1.67 percent, compared with a forecast of 1.66 percent in a Bloomberg News survey of six of the Federal Reserve’s 22 primary dealers.

The Stoxx 600 fell for a fourth day, its longest losing streak in seven weeks, with trading volumes 31 percent above the 30-day average, according to data compiled by Bloomberg. All 19 industry groups in the Stoxx 600 dropped. The gauge is down 2.2 percent from a six-year high reached June 10.

The MSCI Emerging Markets Index slid 0.5 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.7 percent to a one-month low and the Shanghai Composite Index slipped 0.4 percent. Stocks fell on concern the first new share listings in four months tomorrow will divert funds.

 

Russia Sanctions

Russia’s Micex Index lost 2.4 percent.

U.S. Secretary of State John Kerry said in Brussels that the U.S. and Europe will continue to prepare for sanctions against Russia “in the event that the circumstances on the ground” warrant them. Ukrainian President Petro Poroshenko held talks with leaders in Russia, Germany and France to discuss ways to end months of fighting that’s killed more than 400 people.

The rupiah fell 0.8 percent against the dollar after Bank Indonesia said it will allow weakness in the currency to help exports.

Dubai’s General Index jumped 6.1 percent, rebounding after tumbling 13 percent in the previous three days. Dubai’s gauge entered a bear market June 23 after stocks declined 20 percent from a peak in May. Shares had soared more than 250 percent since June 2012, led by property and construction companies.

 

Oil Exports

WTI crude rose for the first time in three days after the Commerce Department granted Pioneer Natural Resources Co. and Enterprise Products Partners LP requests to classify processed condensates as petroleum products eligible for export. The U.S. is allowing ultra-light oil exports as long as the condensate is lightly processed, tempering the impact of a law that’s banned most overseas petroleum shipments for the past four decades.

Brent dropped 0.4 percent, sliding for the third time in four days. Iraq’s oil minister said the nation’s crude exports will jump next month, adding to signs that fighting in the north isn’t affecting the south, where most of the country’s output occurs.

Gold (COMEX:GCN14) futures rose 0.1 percent, erasing an earlier loss of as much as 1.2 percent and ending higher for the sixth straight session, as escalating violence in Iraq boosted demand for the metal as an alternative investment.

 
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