Global stocks dropped as a slump in Chinese exports dragged metals lower and brought equitiesâ€™ five-day winning streak to a halt. Japanese government bonds surged in a haven-asset rally that also lifted the yen, gold and Treasuries.
The Stoxx Europe 600 Index extended its decline from a five-week high as investors sold equities that had led the recent rebound, while Brent crude slid after closing on Monday above $40 a barrel for the first time this year. Industrial metals sank and iron ore fell as Goldman Sachs Group Inc. predicted gains in commodities would falter.
A jump in Japanese bonds that sent yields to record lows helped boost Treasuries and European debt. The yen strengthened against all of its 31 major peers and gold climbed to a 13-month high.
Sustained demand for precious metals and sovereign debt highlights a lack of confidence in the rebounds in global stocks and commodities that took hold over the last three weeks, a period in which $4.6 trillion was added to the value of equities worldwide.
Now data are starting to reinforce those misgivings: Japan announced a drop in fourth-quarter gross domestic product and China reported the biggest tumble in exports in almost six years. That may raise tension before a decision on further stimulus by the European Central Bank on March 10.
â€œThe Chinese trade data is a reminder that the path for the business cycle ahead is pretty rocky and bumpy,â€ said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf. â€œAfter such a rebound some profit taking is natural, especially with no real strong re-acceleration.â€
The MSCI All-Country World Index dropped 0.2 percent at 7:58 a.m. in New York. The yen strengthened 0.4 percent to 113.1 per dollar and gold advanced 0.6 percent to $1,274.81 an ounce.
The Stoxx Europe 600 Index retreated 0.4 percent, led by mining-related companies. Gains in those sectors had helped the Stoxx 600 rebound as much as 13 percent since a Feb. 11 low.
Casino Guichard-Perrachon SA lost 1.9 percent after short seller Muddy Waters said its investigators uncovered evidence indicating the grocer has stretched payments to its suppliers in France beyond whatâ€™s typical in that country. The company has rejected earlier claims by Muddy Waters, saying it has a solid financial structure.
Dialog Semiconductor Plc fell 1.6 percent after the chipmakerâ€™s first-quarter revenue forecasts missed estimates. Burberry Group Plc rose 6.6 percent after the Financial Times reported the luxury-goods company has sought help in defending itself against a potential takeover.
Standard & Poorâ€™s 500 Index contracts slipped 0.3 percent. Equities eked out gains Monday as an oil-spurred surge in commodity producers offset declines in technology and consumer shares. The MSCI Asia Pacific Index fell 0.7 percent as all 10 industry groups retreated. Japanâ€™s Topix dropped 1 percent.
Japanâ€™s economy contracted an annualized 1.1 percent last quarter, and while the drop was less than analysts predicted it underscored growing concern over Prime Minister Shinzo Abeâ€™s reflation program. Chinaâ€™s exports tumbled 25.4 percent from a year earlier in dollar terms in February as imports fell for the 16th month in a row.
â€œThe exports data are very, very poor,â€ said Castor Pang, head of research with Core-Pacific Yamaichi Hong Kong. â€œThe huge decline doesnâ€™t auger well for the stock market.â€
The MSCI Emerging Markets Index slipped for the first time in eight days.
Chinese exports contracted the most in February since 2009, the data showed, days after the National Peopleâ€™s Congress set a lower growth target for the worldâ€™s second-largest economy. Chinaâ€™s benchmark Shanghai Composite Index recovered losses in the final minutes of trading as speculation of buying by state-backed funds helped offset concern about plunging exports.
A gauge of 20 developing-nation currencies fell 0.2 percent, its first decline in seven days.
Chinaâ€™s yuan climbed 0.17 percent as the central bank raised its daily reference rate for the currency following Monday data that showed a slide in the nationâ€™s foreign-exchange reserves moderated in February.
The currencies of raw-material producing nations slumped, led by South Africaâ€™s rand dropping 0.8 percent. Norwayâ€™s krone slid 0.6 percent, while New Zealandâ€™s dollar fell 0.4 percent.
The yen climbed for a second day. Bank of Japan Governor Haruhiko Kuroda told parliament on Monday he doesnâ€™t think additional stimulus is needed at the present time.
â€œThe yen is gaining partly because Kuroda is denying imminent further easing,â€ said Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo. â€œThatâ€™s effectively telling speculative players to go ahead and buy the yen.â€
Japanâ€™s 10-year government bond yield slid to an all-time low of minus 0.1 percent, according to Japan Bond Trading Co., after an auction of 30-year debt drew the strongest demand in almost two years despite a record-low coupon. The yield on 30-year securities tumbled more than 20 basis points, sliding below 0.5 percent for the first time.
The yield on 10-year U.S. Treasuries fell six basis points to 1.85 percent, retreating from a one-month high, and that on similar-maturity German bunds slid five basis points to 0.17 percent and
the five-year yield sank to minus
Pacific Investment Management Co. recommends investors move out of government bonds and into corporate credit because the U.S. will avoid a recession. With sovereign notes in Japan and Germany offering negative yields, and equity valuations stretched, it says high-quality company debt, junk bonds and bank loans offer a better risk-adjusted alternative.
Iron-ore futures on the Singapore Exchange fell 8.8 percent, after a record 19 percent jump on Monday. Citigroup Inc. said itâ€™s still bearish as supply and demand fundamentals remain weak, while Axiom Capital Management Inc. said the price surge was probably just a â€œblip.â€
Copper fell 0.5 percent in London, trimming this monthâ€™s advance to 6 percent. Nickel slid 2.5 percent, retreating from its highest close since November. Goldman Sachs reiterated its view that the drivers for last yearâ€™s slump in industrial metals prices remain intact, predicting drops of as much as 20 percent for copper and aluminum over the next 12 months.
Gold last week entered a bull market â€” commonly defined as a 20 percent advance from the most recent low — and platinum and palladium followed suit on Monday. Platinum rose 0.5 percent on Tuesday, while palladium dropped 1.1 percent.
Brent crude slipped 0.4 percent in London to 41.01 a barrel, after surging 5.5 percent on Monday. It has advanced more than 40 percent since slumping to a 12-year low in January amid speculation a proposal by major producers to freeze production will trim a global glut. Data on Wednesday is forecast to show U.S. stockpiles increased last week to the highest level since 1930.