Fallout from Swiss removing Euro peg

January 16, 2015 10:13 AM

Euro Move

The euro weakened 0.3% to $1.1594 and the dollar strengthened 0.3% versus the yen. Treasuries fell, with the 10-year yield rising three basis points to 1.75%.

The cost of insuring European debt increased, with the Markit iTraxx Senior Financial Index of credit-default swaps on banks and insurers rising two basis points to 69 basis points, data compiled by Bloomberg show.

Two shares declined for every one that advanced in the Stoxx 600. Trading volumes were 33% higher than the 30- day average, according to data compiled by Bloomberg. Volumes on the SMI were four times greater than average, the data show.

“We’ve had so much to digest so early in the year, it’s very difficult to pinpoint a direction in the markets,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “It will take a long time to absorb all this before we can step back and really focus on fundamentals. There’s definitely speculation that the SNB did this in advance of expectations for the ECB to announce QE next week.”

UBS Group AG slid 5%, extending yesterday’s 12% tumble. Credit Suisse Group AG slid 6 percent, following an 11% drop yesterday.

Nestle SA, Novartis AG and Roche Holding AG -- the biggest shares on the Stoxx 600 -- dropped at least 3.9%. Stocks of Swiss exporters rebounded today, while watchmakers Cie. Financiere Richemont SA and Swatch Group AG extended yesterday’s losses.

BP Plc gained after a U.S. judge ruled that the company faces a $13.7 billion fine for the 2010 Gulf of Mexico oil spill, about a quarter less than the U.S. had calculated.

The MSCI Emerging Markets Index fell 0.4%, taking its loss this week to 0.6%, ending four weeks of gains. South Korea’s won and the Taiwan dollar rose 0.6% against the dollar, while the Polish zloty slipped 0.3% versus the euro.

The Shanghai Composite Index rallied 1.3% The gauge has advanced 2.6% this week, a 10th week of gains that’s the longest winning streak since May 2007, after credit growth expanded and speculation grew the central bank will cut reserve- requirement ratios. The Hang Seng China Enterprises Index slipped 0.9%, leaving it little changed for the week.

South Korea’s Kospi sank 1.4% as the won’s gain to a two-month high dragged exporters including Hyundai Motor Co. and Samsung Electronics Co. lower.

West Texas Intermediate crude’s gain trimmed this week’s decline to 2.7%. The contract slid for an eighth week, the longest run of losses since 1986, as a global supply glut shows little sign of abating. Brent crude climbed 3.8 percent to $49.48 in London, leaving it 1.2% lower over five days.

Non-OPEC oil producers will increase output this year at a slower rate than previously forecast, aiding a recovery in crude prices, the International Energy Agency said in a report today. The Paris-based adviser lowered its non-OPEC supply growth estimate in the first cut since the 2015 forecast was introduced in July.

Oil prices have collapsed almost 60% from last year’s peak, as the Organization of Petroleum Exporting Countries resolved to defend market share against the fastest U.S. production in more than three decades.

Copper for three-month delivery on the London Metal Exchange rose 1 percent, paring this week’s loss to 6.7%, the biggest such retreat since September 2011.

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