Stocks, commodities end winning streaks as growth optimism ebbs

BLOOMBERG

Weeklong rallies for global stocks and commodities ended as the outlook for economic growth rekindled investor caution.
The MSCI All-Country World Index fell for the first time in six days after reaching a six-month high, and futures on the S&P 500 indicated the gauge will slip after closing close to a record high. The Bloomberg Commodity Index was set to end the longest run of gains since March, as oil and metals fell. Bonds rose, with U.K. gilt yields declining to a record low. Emerging markets retreated.
Investor optimism is starting to flag as weak U.S. hiring data, the looming Brexit vote and European Central Bank President Mario Draghi’s call for government-led reforms revive concerns about the ability of central banks to bolster the global economy. Billionaire George Soros has also recently made a series of large, bearish investments, according to a person familiar with the matter.
“Growth still doesn’t look brilliant,” said Peter Dixon, global equities economist at Commerzbank AG in London. “The kind of rally we’ve had in the past few days across most assets doesn’t tend to last very long.”
The MSCI All-Country World Index lost 0.5 percent at 8:35 a.m. in New York, and S&P 500 futures expiring this month retreated 0.4 percent. The Stoxx Europe 600 Index dropped 1 percent.
Among stocks moving in early New York trading, Restoration Hardware Holdings Inc. plunged 20 percent after the upscale furniture chain posted a surprise loss and cut its annual earnings forecast. Natural-gas producer Chesapeake Energy Corp. slid 3 percent after trading new shares for notes for the third time in less than a month.
The MSCI Emerging Markets Index dropped 0.5 percent. Russia’s Micex slid 0.9 percent and India’s S&P BSE Sensex index lost 1 percent, dropping from the highest close since October.
U.S. initial jobless claims unexpectedly fell last week to 264,000. Continuing claims dropped to 2.1 million in the previous week, the lowest since October 2000.

Commodities
The Bloomberg Commodity Index erased earlier gains, putting it on track for the first decline in seven days. Brent crude oil fell 1 percent to $51.97 a barrel, heading lower for the first time in four sessions, as the dollar
strengthened.
Gold for immediate delivery fell 0.2 percent to $1,260 an ounce. Platinum and palladium fell about 1.3 percent. Aluminum dropped 0.9 percent and copper fell 1.4 percent.
Bonds
U.K. governments bonds extended gains before a June 23 poll on whether the nation should leave the European Union. The 10-year yield touched 1.22 percent, the lowest since Bloomberg started tracking the data in 1989. It could fall to 1 percent if the nation votes to leave the world’s biggest single market, according to Daniela Russell, a portfolio construction associate at Legal & General Group Plc.
Treasuries advanced, with the 30-year yield falling to its lowest level since Feb. 11, before an auction of $12 billion of the securities, which comes a day after an offering of 10-year notes garnered record demand from investors bidding through primary dealers. The Treasury 30-year yield fell three basis points to 2.476 percent, and that on 10-year securities also slid three basis points, to 1.671 percent, having reached the lowest since Feb. 24.
Bonds of the euro-area’s higher-rated nations climbed, with the German 10-year bond yield matching the 0.033 percent record low it first touched on Wednesday.
The ECB bought corporate bonds for a second day as it steps up stimulus efforts. Purchases included 2019 notes issued by Volkswagen AG, as well as debt from tiremaker Continental AG and mobile-phone company Orange SA, according to a person familiar with the matter.
President Draghi also said politicians need to speed up reforms to help restore the region’s economic health.
“There are many understandable political reasons to delay structural reform, but there are few, very few, good economic ones,” he said in a speech in Brussels on Thursday. “The cost of delay is simply too high.”
The yield on South Korea’s three-year government note dropped to an all-time low of 1.35 percent. The central bank unexpectedly cut the benchmark interest rate to a record low on Thursday, citing growing risks to the economy including slowing global trade and the government’s push to restructure indebted companies.
Oman raised $2.5 billion in a sale of five- and 10-year notes, its first international offering in almost two decades. Governments and companies from the six-nation Gulf Cooperation Council have been tapping the bond market to plug funding shortfalls after the price of crude tumbled over the past two years.

Currencies
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.2 percent, snapping a two-day drop. The U.S currency strengthened about 0.4 percent to $1.1353 per euro and was 0.5 percent weaker against the yen. The kiwi soared as much as 2 percent to 71.48 U.S. cents, its strongest level in about a year, after the Reserve Bank of New Zealand refrained from cutting rates and said it expects inflation to accelerate.
China, Hong Kong and Taiwan markets were shut for holidays.