Monday, 11 May, 2015

Europe Bonds Drop on Greece; Asia Stocks Rise on China Rate Cut

(Bloomberg) — Spanish and Italian bonds retreated amid concern that Greece will struggle to secure more aid, while Airbus Group NV led French stocks lower. Asian equities gained after China’s central bank cut interest rates for the third time in six months. The yield on 10-year bonds from Spain and Italy rose at least five basis points by 8:10 a.m. in London, while similar German bunds and Treasuries were little changed. The euro was 0.2 percent weaker and New Zealand’s dollar lost 1.3 percent. The CAC 40 Index dropped 1 percent as Airbus slumped after a crash. The MSCI Asia Pacific Index rose 0.4 percent and the Shanghai Composite Index jumped 3 percent. Standard & Poor’s 500 Index futures fluctuated. Euro-area finance ministers meet Monday as resistance to further help for Greece builds. China is bolstering stimulus as data signal the world’s second-largest economy may struggle to meet its official growth target of about 7 percent. U.S.-payroll growth in April came in just below estimates, while the March gain was revised down to the lowest since 2012, further pushing back estimates for when the Federal Reserve may increase rates. “The to-ing and fro-ing on Greece, given they’ve got that payment to the IMF due very soon,” is weighing on euro, said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney. Uncertainty over Greece’s future is set to continue as negotiations will probably be “kicking the can down the road for a while longer,” he said. Hong Kong Members of German Chancellor Angela Merkel’s Christian Democratic bloc are openly challenging her stance of keeping Europe’s most-indebted country in the 19-nation currency region. Governments can sometimes default by accident, German Finance Minister Wolfgang Schaeuble warned in an interview with Frankfurter Allgemeine Sonntagszeitung published Saturday. The euro slid to $1.1176 and the pound weakened 0.3 percent. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 of its most-traded peers, climbed 0.2 percent. Poland’s zloty slid 0.6 percent after a shock defeat for President Bronislaw Komorowski in first round voting in national elections. A run-off against opposition candidate Andrzej Duda will be held May 24. The kiwi dropped to 73.94 U.S. cents, while the Australian dollar bought NZ$1.0684 after reaching NZ$1.0698, the highest since Feb. 3. ANZ Bank New Zealand Ltd. and First NZ Capital Ltd. joined five other banks in predicting lower New Zealand rates this year. PBOC Cuts Airbus was the biggest drag on the CAC 40, slumping more than 3 percent as air forces across Europe suspended flights of its A400M military transport aircraft after a crash near Seville, Spain, killed four people. The Stoxx Europe 600 Index was little changed. The People’s Bank of China cut the one-year lending rate 0.25 percentage point to 5.1 percent, and reduced the one-year deposit rate by the same amount to 2.25 percent. The central bank also raised the limit on what banks can pay savers. Hong Kong’s Hang Seng China Enterprises Index climbed 1.2 percent after dropping as much as 0.2 percent earlier. The Hang Seng Index advanced 0.7 percent. The Shanghai Composite erased an early loss. Even after rising 2.3 percent Friday, the benchmark for China’s biggest equity venue ended last week 5.3 percent lower, the biggest such slump since July 2010. Data at the weekend showed Chinese consumer prices rose in April at half the government’s target for 2015. Australia’s S&P/ASX 200 Index was little changed after climbing as much as 1.1 percent in early trading. The Aussie dollar slipped 0.5 percent to 78.93 U.S. cents. China is the South Pacific country’s biggest trading partner. Symbolic Cut “China’s rate cut was symbolic,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which oversees about $474 billion. “The U.S. jobs figures weren’t bad, but not strong enough for a rate increase, so the outlook for a rate rise has been pushed back. The stock market is now a monetary-policy market.” U.S. employers added 223,000 workers to nonfarm payrolls in April, after a 85,000 increase in March that was the smallest since June 2012. The jobless rate fell to 5.4 percent from 5.5 percent, the lowest since May 2008. The S&P 500’s 1.3 percent advance Friday erased a loss for the week that was spurred by concern the economy was slowing as the Fed considers raising rates. Disclaimer The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. 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