Friday, 22 May, 2015

Euro Climbs With European Bonds as Dollar Pares Weekly Advance

(Bloomberg) — The euro advanced, helping to trim the dollar’s first gain in six weeks, and European bonds climbed. Chinese shares capped their biggest weekly increase this year, while oil is set for a record rising streak. The shared currency strengthened 0.4 percent by 8:12 a.m. in London, dragging the Bloomberg Dollar Spot Index 0.2 percent lower. Yields on 10-year notes from Germany and France fell three basis points. The Stoxx Europe 600 Index was little changed, while Standard & Poor’s 500 Index futures rose 0.1 percent. The Shanghai Composite Index extended the week’s gain to 8.1 percent. U.S. oil was at $60.64 a barrel, set for a record 10th weekly advance. Wheat climbed. Federal Reserve Chair Janet Yellen speaks on the economy after data that’s estimated to show inflation slowed to just 0.1 percent in April from 0.2 percent the previous month. Mixed U.S. economic reports have prompted investors to push back estimates for when the Fed will begin raising rates, helping to drive equities to all-time highs. The Bank of Japan kept its record stimulus program unchanged Friday. “The U.S. CPI is unlikely to surprise markets,” said Masashi Murata, vice president at Brown Brothers Harriman & Co. in Tokyo. “Speculation about the timing of when rates will be raised may have been pushed back, but the dollar is being bought and it’s on an uptrend. The euro is clearly overvalued. Even with the drop in European yields, the currency hasn’t adjusted.” Dollar Index The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, has climbed 1.6 percent this week. It fell Thursday as housing data trailed estimates and U.S. jobless claims increased in the week. The euro strengthened to $1.1155. The Australian dollar added 0.4 percent and the Swiss franc climbed 0.3 percent. Scandinavian currencies rallied. The New Zealand dollar rose 0.5 percent to 73.84 cents, trimming its weekly loss to 1.2 percent. The South Pacific country’s currency is heading for a fifth weekly retreat, the longest streak since October. German bunds due in a decade paid 0.61 percent and similar French notes offered 0.89 percent. Spanish, Italian and Portuguese 10-year bond yields fell at least three basis points. The yen climbed 0.3 percent to 120.66 per dollar after snapping a five-day slump Thursday. The BOJ said it will continue its easing efforts until inflation hits 2 percent. The central bank said the consumer-price index will probably remain flat due to the effects of lower energy prices. World Awash “There’s lots of money floating around with QE in both Japan and in Europe certainly supportive of markets,” James Lindsay, who helps manage the equivalent of about $3 billion in assets at Nikko Asset Management NZ Ltd. in Auckland, said by phone. The value of global equities rose to a record $72.97 trillion Thursday as the S&P 500 and MSCI All-Country World Index edged higher. Just four of the 19 groups on the Stoxx 600 Index climbed Friday after the gauge advanced through the previous four days. Chinese stocks are extending a world-beating rally, with the combined value of mainland and Hong Kong equities surpassing the aggregate of Europe’s 10 largest markets. The Shanghai Composite Index climbed 2.8 percent Friday and the Shenzhen Composite Index added 1 percent on its way toward a 12 percent weekly gain, the biggest since November 2008. Hong Kong’s Hang Seng China Enterprises Index rose 1.7 percent. Crashes Ignored Investors haven’t been deterred after some of Hong Kong’s highest-flying stocks of 2015 came crashing back to earth this week. Goldin Financial Holdings Ltd. and Goldin Properties Holdings Ltd., controlled by billionaire Pan Sutong, plunged more than 40 percent Thursday. A day earlier, Hanergy Thin Film Power Group Ltd. tumbled 47 percent in 24 minutes. The stocks had surged at least 500 percent in the prior 12 months. Japan’s Topix erased an early decline to finish little changed after a five-day climb. The index finished the week up 2.5 percent. The Nikkei 225 Stock Average gained 2.7 percent this week and closed at a 15-year high on Thursday. Wheat futures in Chicago climbed for a third day, rising 1 percent to $5.27 a bushel, near the highest level in a month. Prices advanced 2.7 percent this week, the third such increase and the longest winning streak since December. Heavy rains have spoiled the quality of the wheat crop in the U.S. Soybeans fell to the lowest level since October on rising global supplies. 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. 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