Oil falls on OPEC, US stocks slip amid global growth concern

BLOOMBERG

Global stocks slid to a six-week low and commodities fell as markets braced for the possibility that the Federal Reserve will raise interest rates as soon as next month. A gauge of the dollar’s strength stood at a seven-week high.
Oil fell as OPEC members agreed to stick to the policy of unfettered production, while European stocks and bonds slipped with U.S. equities after the European Central Bank indicated its policies have yet to spur growth.
Crude erased gains and fell toward $48 a barrel after talk of an OPEC output limit was scuttled. U.S. stocks dropped as jobs data supported the case for higher interest rates as early as this summer. European equities slid, while the euro advanced, as ECB President Mario Draghi said that the full effect of the institution’s monetary stimulus measures is yet to be felt. The yen climbed against all of its Group of 10 peers.
The ECB didn’t lift its inflation targets, raising concern that an enlarged stimulus program has yet to take hold a day after manufacturing readings from Asia to Europe signaled tepid growth. Global markets have started June tentatively, as investors await U.S. jobs data Friday that may determine the Fed’s next policy move. The U.K. vote on whether to remain in the European Union looms in three weeks.
“Investors are rightly fixated on tomorrow’s release with labor figures,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve of US Bank in New York. “Between the ECB, looking at initial jobless claims, and you add the ADP numbers and also OPEC, it really points to the limited expectations and none of the data points being outside the realm of what was anticipated.”
The ECB kept its stimulus program unchanged and said it will start buying corporate bonds next week, as measures announced two months ago kick in. A U.S. jobs report from the ADP Research Institute showed 173,000 workers were taken on in May, while filings for U.S. unemployment benefits declined for a third consecutive week, according to a separate report.

Commodities
Brent crude erased gains, sliding 1.4 percent to $49.01 a barrel at 9:31 a.m. in New York, while West Texas Intermediate dropped 1.7 percent to $48.18. OPEC didn’t reach a deal on a new production target, Sudirman Said, Indonesia’s Minister of Energy, said in Vienna.
Saudi Arabia was discussing ideas with fellow OPEC members including restoring a production target scrapped in December, according to delegates familiar with the situation. Iran resisted overtures from Saudi Arabia to restore a production target scrapped at the group’s last meeting in December.
Gold rose 0.2 percent, after falling on 10 of the last 11 trading days. Zinc climbed 0.7 percent to the highest since July on the London Metal Exchange, while copper and nickel retreated.

Stocks
The S&P 500 Index fell 0.2 percent to 2,094.71, following two days with little movement. The index twice climbed above 2,100 this week without holding that level into the close.
The Stoxx Europe 600 Index fell 0.2 percent, erasing gains of as much as 0.3 percent, after Wednesday capping its biggest two-day decline in four weeks. A drop in energy companies helped outweigh gains among banks.
Energy and raw-material producers led the MSCI Emerging Markets Index up 0.1 percent in its first gain this week. Chinese shares climbed in the final half hour of trading, lifting the Shanghai Composite Index up 0.4 percent to a one-month high. The Hang Seng China Enterprises Index of mainland companies in Hong Kong rose 0.6 percent.
Japan’s Topix index tumbled 2.2 percent after Prime Minister Shinzo Abe held back a widely-expected fiscal stimulus package. He postponed a planned sales-tax hike until October 2019 and vowed to take “bold” economic steps in the autumn.

Currencies
The yen strengthened 0.6 percent to 108.90 per dollar, after surging 1.4 percent in the last two trading sessions.
“This move in the yen is maybe more about a risk-off move, than sort of a positive sentiment,” Sassan Ghahramani, chief executive officer of SGH Macro Advisors, said on Bloomberg TV. “People got a little bit ahead of themselves and were expecting some sort of announcement on a supplementary budget. When that didn’t come, I think there was a bit of a disappointment trade.”
The Bloomberg Dollar Spot Index was little changed, after sliding 0.4 percent in the last session. Investors are paying close attention to U.S. data after Fed officials indicated a potential interest-rate hike as soon as this summer was contingent on continued improvement in the economy.
The euro added 0.1 percent, after climbing 0.5 percent on Wednesday, and the British pound rose 0.3 percent from near a two-week low. The U.K. currency sank around 1.5 percent over the last two days as polls indicated growing support for the country to leave the EU.
The MSCI Emerging Markets Currency Index added less than 0.1 percent, while the ruble erased gains with oil, falling 0.2 percent.
India’s rupee advanced 0.2 percent, strengthening for the first time in four days. The currency erased gains and bonds declined on Wednesday after a local-language newspaper reported central bank Governor Raghuram Rajan doesn’t want an extension of his term. The Reserve Bank of India, the Prime Minister’s Office and the Finance Ministry all had no comment on the report.

Bonds
Ten-year Japanese government bonds yielded minus 0.12 percent after a sale of the tenor achieved the highest bid-to-cover ratio since August 2014.
Government securities across the euro zone dropped, with bonds of nations from the region’s lower-rated countries leading declines.
Spain’s 10-year bond yield rose two basis points to 1.51 percent as demand weakened at a series of auctions for the nation’s debt. Yields on similar-maturity Italian bonds climbed two basis points to 1.40 percent, while German bund yields were little changed at 0.14 percent.
The cost of insuring corporate debt against default held at the highest since May 24. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies traded at about 74 basis points. A gauge of swaps on junk-rated companies was little changed at 316 basis points.
Copper, nickel and zinc fell by at least 0.8 percent in London. Gold slid to a three-week low on concern the Fed is moving closer to raising interest rates. Metal for immediate delivery fell as much as 0.9 percent to $1,246.67 an ounce.