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Wellington - The dollar climbed against most peers, snapping a four day losing streak, while US equity-index futures signalled a retreat from Friday’s record close. Bonds fell in Italy and Spain, while silver and gold advanced.
The euro slid 0.4% versus the greenback by 9:17, while the yen weakened 0.3% and New Zealand’s dollar slumped 0.7%.
Standard & Poor’s 500 Index futures fell 0.2%, while the Stoxx Europe 600 Index fluctuated. Chinese shares slumped. Yields on 10-year notes from Spain and Italy rose at least five basis points. Gold climbed 0.3% and silver added 1%, while US oil advanced.
A Bloomberg gauge tracking the dollar against 10 peers on Friday capped its longest streak of weekly losses since October 2013 after mixed economic reports forced investors to push back estimates for when US interest rates will begin to rise.
Talks on an aid package for Greece continue in Europe. China reported that new-home prices fell in fewer cities last month.
“Investors are likely to start the week in cautious mode as markets assimilate the impact of weaker than expected US data and wait on developments in the Greek debt saga,” Ric Spooner, chief market analyst in Sydney at CMC Markets, wrote in an e-mail to clients.
“The first Fed rate hike now seems at least several months away. While this supports equity valuations, it also means that the outlook for world growth remains subdued.”
Kiwi Rates
The Bloomberg Dollar Spot Index, a gauge of the currency versus 10 major peers, added 0.2% after sinking to its lowest level in almost four months last week. The euro dropped to $1.1421 following a four-day gain of 2.7%. The pound slipped 0.3%.
European Union leaders meet in Riga from May 21, amid few signs of progress in talks between Greece and its creditors. An International Monetary Fund memo dated May 14 said Greece won’t be able to make an IMF payment on June 5 unless an accord is reached with partners, the UK’s Channel 4 news reported on Saturday.
New Zealand’s currency led declines against the dollar, weakening a second day, to 74.32 US cents after the government announced property-tax measures to curb speculation.
The new rules free the Reserve Bank of New Zealand to focus on other drivers for monetary policy, including officials’ concern over the strength of the local dollar, said Sam Tuck, a senior currency strategist in Auckland at ANZ.
There’s a 53% chance of a rate reduction in June, up from 48% a week ago, swaps data compiled by Bloomberg showed.
Stoxx 600
The Stoxx 600 capped a second decline in three weeks on Friday.
BHP Billiton [JSE:BIL] was the biggest drag on Europe’s benchmark index, with the world’s biggest mining company dropping 5.2% in London as its metals spinoff started trading.
South32, the spinoff that’s the world’s biggest manganese-ore producer and operator of the largest silver mine, missed analysts estimates on its Sydney trading debut with investors valuing it at about A$11.3bn.
READ: BHP's South32 debut misses estimates
Hong Kong’s Hang Seng Index fell 1.1% and a gauge of Chinese shares in the city retreated 1.3% for its fourth decline in five days. The Shanghai Composite Index decreased 0.6% as initial public offerings tied up funds. Shares in the southern city of Shenzhen surged.
The weaker yen helped fuel Japanese stock gains. Mitsubishi UFJ Financial Group was the biggest contributor to gains on the Topix index after profit reached a record and the lender announced it will buy back shares.
Ten-year Treasury yields were little changed at 2.15% after sliding 15 basis points the previous two trading days. European debt resumed its decline after a breather Friday, when German, Spanish and Italian 10-year yields plunged at least eight basis points.
Nickel in London fell 0.9%, extending its first weekly decline in almost a month, as the metal in Shanghai dropped 1%.
The Shanghai Futures Exchange met on Friday with the head of global sales at OAO GMK Norilsk Nickel, the world’s largest producer, as it seeks to approve delivery of foreign-made nickel into its futures contract to relieve a shortage of supply to the bourse.
The Chinese exchange currently only allows six deliverable brands by six domestic companies.
Rig Count
West Texas Intermediate crude climbed 1.4% to $60.52 a barrel. WTI declined 1.7% on the final three days of last week, trimming its ninth straight weekly advance to 0.5%. The three-day retreat marked its longest run of consecutive losses since the end of March. Brent oil climbed 1.1% to $67.52 a barrel.
Oil’s rally from a six-year low is stalling as US output remains near a record. Gulf members of OPEC are boosting supplies as they escalate a battle to defend market share, the International Energy Agency said. The price recovery threatens to prolong the surplus, according to Goldman Sachs Group.
Rigs targeting oil in the US fell by eight to 660 last week, the smallest drop in 23 straight weeks of declines, according to Baker Hughes' website. Texas’s Eagle Ford shale formation added a rig for the first time in seven weeks.
