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Stocks decline with commodities as pound slumps

Feb 17 2017 14:38
Robert Brand and Eddie van Der Walt

Cape Town - European stocks dropped for a second day as commodity producers tracked declines in oil and metal prices, while the pound weakened after a report showed UK retail sales fell in January.

French bonds retreated and the euro weakened after two left-wing presidential hopefuls discussed a potential single candidacy that would bring about a showdown with Marine le Pen’s anti-euro National Front.

A gauge of commodities headed for the lowest close in more than a week, dragged down by industrial metals which were hurt by signs of tightening liquidity in top consumer China. The pound headed for the lowest level in a month.

Stocks are pausing a rally as investors go back and forth assessing the prospects for President Donald Trump’s economic plans and the timing of US interest-rate increases. In Congressional testimony this week, Federal Reserve chair Janet Yellen warned against waiting too long to tighten policy. Concerns about France’s future in the euro region in the event of a Le Pen presidency are roiling the country’s assets.

“The softness we’re seeing this morning isn’t surprising given the positive energy we’ve had in the past week,” said Nandini Ramakrishnan, a London-based strategist at JPMorgan Asset Management. “Le Pen strength in the polls does mean a weaker euro. We expect the euro to be a first bearer of that brunt.”

What’s coming up:

The Conference Board releases the US leading economic index for January. US tractor-maker Deere & Co is among the companies reporting earnings.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index fell 0.4% as of 13:33 as resources companies slid 1.2%. Futures on the S&P 500 Index dropped 0.3% after the benchmark gauge fell for the first time in eight days, halting the longest rally since 2013. The MSCI Asia Pacific Index lost 0.3%, with China stocks traded in Hong Kong paring a weekly gain.

Bonds

Treasuries gained, pushing the yield on benchmark 10-year notes down three basis points to 2.42%.

European government bonds were mixed. French notes fell, with yields on 10-year notes rising one basis point to 1.03%.

German bonds gained, with benchmark yields dropping four basis points to 0.31%, while gilts advanced following the retail report, driving benchmark yields four basis points lower to 1.22%.

Commodities

The Bloomberg Commodity Index, which measures returns on raw materials, fell 0.6% heading for its fourth weekly drop in five. Industrial metals fell, with nickel down 0.9%, the most on the London Metal Exchange. Oil declined 0.6% to $53.03 a barrel.

Crude is heading for its first weekly decline in five weeks as expanding US crude stockpiles countered output cuts from OPEC and other producing nations. Gold nudged 0.2% higher to $1 241.75 an ounce and is and is set for its seventh weekly gain in eight weeks.

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equities  |  markets  |  global markets

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