Tuesday, 26 May, 2015

Dollar Jumps on Greece, Fed as China Stocks in Hong Kong Surge

(Bloomberg) — The dollar surged as wrangling over Greece’s aid demands undermined European currencies amid speculation on the timing of U.S. interest-rate increases. Chinese stocks in Hong Kong surged toward a seven-year high. The Bloomberg Dollar Spot Index jumped 0.6 percent by 8:20 a.m. in London, with the euro 0.8 percent lower and the Swiss franc falling 0.6 percent. The yen plunged to the weakest in almost eight years. German bunds rose with Treasuries, while Italian and Spanish bonds dropped. The Hang Seng China Enterprises Index jumped 2.9 percent. The Stoxx Europe 600 Index rose 0.2 percent. Standard & Poor’s 500 Index futures were little changed. Greece is seeking to revive its bid for aid after the country’s finance minister asked creditors to compromise on their austerity demands. U.S. markets open after the Memorial Day holiday, with reports on home prices and durable-goods orders due after Federal Reserve Vice Chairman Stanley Fischer said interest-rate increases will be driven by data. Fed Chair Janet “Yellen’s comments last week that a rate hike this year would be appropriate has clearly given the dollar a lift across the board,” said Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong. “Add to that the political risk premium widening in the euro, and that’s helping see the euro a lot lower too.” Euro Slumps The Bloomberg dollar index, which tracks the U.S. currency against 10 major peers, is at its highest in a month. The dollar gained 0.9 percent to 122.67 yen, the strongest level since July 2007. The South Korean won lost 1 percent to 1,101.05 per dollar from Friday’s close. The euro bought $1.0894, having dropped 4.1 percent through Monday from May 15. The joint currency is down against all major peers through the last five days. Norway’s krone led Scandinavian currencies lower, dropping 0.7 percent versus the dollar, while Poland’s zloty and Hungary’s forint fell at least 0.9 percent. Greek officials say the economy can’t take further austerity and want creditors to compromise as deadlines for government pensions and salaries and a repayment to the International Monetary Fund approach. Greek shares fell the most in almost three weeks on Monday, with the benchmark Athens Stock Exchange losing 3.1 percent. The gauge has fallen more than 30 percent in the past 12 months, making it one of the worst performing major equity indexes tracked by Bloomberg. Stocks Gain Fed Bank of Cleveland President Loretta Mester, who doesn’t vote this year, said that quickening inflation and strong employment growth are pushing the U.S. economy close to the point where it can support higher borrowing costs. The Fed’s rate-setting committee will go into its June meeting with an “open mind” about whether to raise the central bank’s benchmark rate, Mester said. All 19 groups on the Stoxx 600 advanced Tuesday, led by travel and leisure shares as Ryanair Holdings Plc said full-year earnings jumped 66 percent. The Hang Seng Index climbed 1.3 percent on trading volume that was about 14 percent higher than the 30-day average for the time of day. The Hang Seng China Enterprises Index is heading for its highest close since January 2008. Fund Recognition The Shanghai Composite Index rose 2 percent after a five-day, 12 percent rally. China and Hong Kong approved cross-border fund sales from July 1 in a move that will widen access to financial markets and capital in the world’s second-largest economy. The initial quota will be a total 600 billion yuan ($97 billion), split evenly in each direction. “We expect the mutual recognition of funds will encourage more mainland retail investors to increase their allocation to the Hong Kong market,” said Citigroup Inc. analysts led by Anil Daswani in a note dated May 26. “In the past 20 years, we have seen strong correlations between market turnover and the performance of the Hang Seng Index. We are of the view that the recent pickup in turnover is the start of another round of bull markets.” The MSCI Asia Pacific Index fell 0.2 percent as plunging regional currencies cut the value of index members’ shares. Australia’s S&P/ASX 200 Index advanced 0.9 percent and Japan’s Topix index was little changed after a seven-day rally took it to its highest close since October 2007. Treasuries, Nickel Treasuries climbed, with 10-year yields down two basis point, or 0.02 percentage point, to 2.19 percent. Ten-year rates jumped seven basis points last week. Nickel rose from a four-week low and most base metals rebounded as China seeks more than $300 billion in infrastructure investment. Nickel gained as much as 2.3 percent and all metals advanced on the London Metals Exchange. China is seeking nearly 2 trillion yuan ($322 billion) in public-private investment, the National Development and Reform Commission announced Monday. The projects include a subway line in Beijing, garbage-treatment plants and sewers as part of the government’s push to stimulate growth in the world’s biggest metals user. Brent crude futures fell 0.7 percent to $65.06 a barrel in London after rising Monday for the third time in four days. Iraq’s prime minister pledged a swift takeover of the city of Ramadi from Islamic State militants, while in Saudi Arabia, King Salman vowed to punish those responsible for a suicide attack on Shiite worshipers. The Organization of Petroleum Exporting Countries will maintain its output quota at a June 5 meeting, a Bloomberg survey shows. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. This information is not, and should not be construed as, a recommendation, solicitation or offer to buy or sell any securities or related financial products. This information does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances, needs or objectives of persons who receive it. You are receiving this email because you are a valued client of Archr.