European Stocks, U.S. Futures Decline; Copper Advances on China
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By Stuart Wallace
Sept. 1 (Bloomberg) -- European stocks and U.S. index futures dropped on
speculation valuations have overtaken the economic recovery. Copper rose in
New York as Chinese manufacturing expanded at the fastest pace in more than
a year.
Europe’s Stoxx 600
<http://www.bloomberg.com/apps/quote?ticker=SXXP%3AIND>slid 1.1
percent at 8:12 a.m. in New York and
futures <http://www.bloomberg.com/apps/quote?ticker=GSPA%3AIND> on the
Standard & Poor’s 500 Index declined 0.4 percent. Copper rose 1.6 percent in
New York trading.
The 48 percent rally in the Dow Jones Stoxx 600 Index since March 9 drove
the average price-earnings
valuation<http://www.bloomberg.com/apps/quote?ticker=SXXP%3AIND>for
its companies to the highest level since 2003. Investors are concerned
the gain may have outpaced the prospects for a recovery from the first
global recession since World War II. European manufacturing contracted in
August, an industry report showed, and a similar gauge in the U.K. dropped
unexpectedly.
“This type of number shows that things aren’t as solid as expected, there’s
a fragility,” said Guillaume
Duchesne<http://search.bloomberg.com/search?q=Guillaume+Duchesne&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>,
a Geneva-based equity strategist at Fortis Private Banking, which oversees
about $117 billion. “Economic statistics direct the market. The question is,
do we believe in a recovery that’s rather smooth or something that isn’t as
good.”
Paul Tudor
Jones<http://search.bloomberg.com/search?q=Paul+Tudor+Jones&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>’s
Tudor Investment Corp., Clarium Capital Management LLC and Horseman Capital
Management Ltd. are among funds betting that Goldman Sachs Group Inc. and
Morgan Stanley got it wrong in declaring the start of an economic recovery.
The firms oversee a combined $15 billion in so-called macro funds, which
seek to profit from economic trends by trading stocks, bonds, currencies and
commodities.
BHP, Rio Fall
BHP Billiton Ltd. <http://www.bloomberg.com/apps/quote?ticker=BLT%3ALN> and
Rio Tinto Group declined more than 1.9 percent in London. The Dow Jones
Stoxx 600 Index had earlier climbed as much as 0.7 percent as earnings
from Vivendi
SA <http://www.bloomberg.com/apps/quote?ticker=VIV%3AFP> and Hon Hai
Precision Industry
Co.<http://www.bloomberg.com/apps/quote?ticker=2317%3ATT>beat
analysts’ estimates.
U.S. stock-index futures sank after a six-month rally drove valuations on
the Standard & Poor’s 500
Index<http://www.bloomberg.com/apps/quote?ticker=SPX%3AIND>to the
highest level since 2004. American International Group Inc. slid 5.6
percent in pre-market trading in New York after Sanford C. Bernstein & Co.
recommended investors reduce their holding in the stock.
Japan, France and Germany are emerging from recessions prompted by the
collapse of U.S. real estate that froze credit markets and left the world’s
biggest financial companies with $1.61 trillion of losses and writedowns.
U.S. manufacturing probably expanded in August for the first time in 19
months. The Institute for Supply Management’s factory gauge increased to
50.5 from 48.9 in July, according to the median of 74 forecasts in a
Bloomberg News survey. Fifty is the dividing line between expansion and
contraction. The report is scheduled for release at 10 a.m. New York time.
Emerging Markets
The MSCI Emerging Markets
Index<http://www.bloomberg.com/apps/quote?ticker=MXEF%3AIND>advanced
0.5 percent as technology companies surged. Hon Hai, the world’s
largest contract maker of electronics, jumped 6.8 percent to the highest
level in a year on earnings that topped analysts’ estimates. OAO
Rosneft<http://www.bloomberg.com/apps/quote?ticker=ROSN%3ARM>and OAO
Lukoil <http://www.bloomberg.com/apps/quote?ticker=LKOH%3ARM>, Russia’s
biggest oil companies, led a 0.7 percent increase in the nation’s Micex
index.
The euro was little changed near a three-week high against the dollar after
a government report showed that German
unemployment<http://www.bloomberg.com/apps/quote?ticker=GRUEPR%3AIND>unexpectedly
fell in August, adding to signs that the 16-nation currency
region is emerging from the recession.
The euro gained versus the Australian dollar and the New Zealand dollar
after Germany’s Federal Labor Agency said unemployment held at 8.3 percent
in August, after economists forecast a rise to 8.4 percent. The yen fell
against 12 of 16 major currencies as China’s manufacturing report spurred
demand for higher-yielding currencies.
U.K. Manufacturing
The pound fluctuated against the dollar as an index of U.K. manufacturing
compiled by the Chartered Institute for Purchasing and Supply unexpectedly
fell to 49.7 in August from 50.2 in July.
U.S. Treasuries reversed earlier losses to trade little changed. The yield
on the 10-year note declined to 3.40 percent, after rising to 3.41 percent.
German government bonds advanced, driving the yield on the two-year note 4
basis points lower to 1.19 percent.
The U.K. two-year gilt yield fell to a record low of 0.819 percent, a level
not seen since January 1992, when Bloomberg started collecting data on the
security.
The cost of protecting European corporate bonds from default jumped the most
in two weeks, with the Markit iTraxx Europe index of credit-default swaps
rising 4.25 basis points to 95.25, the highest since Aug. 21, according to
JPMorgan Chase & Co. prices.
Copper for December delivery rose 1.6 percent on the Comex division of the
New York Mercantile Exchange. The metal declined in trading on the London
Metal Exchange, which was closed for a national holiday yesterday. China,
the world’s biggest metals consumer, said manufacturing expanded at the
fastest pace in 16 months in August.
White sugar advanced as much as 5.3 percent to a record $603.60 a metric ton
on the Liffe exchange in London on speculation supply will fall short of
demand.
To contact the reporter on this story: Stuart
Wallace<http://search.bloomberg.com/search?q=Stuart+Wallace&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>in
London at
swalla...@bloomberg.net; Daniel
Hauck<http://search.bloomberg.com/search?q=Daniel+Hauck&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>at
dhau...@bloomberg.net
