Global stocks decline as crude oil fluctuates, dollar weakens

BLOOMBERG

Shares retreated around the world, while crude oil fluctuated amid concerns that a supply glut will persist. The yen strengthened, reflecting investor caution before central bank meetings this week in the U.S. and Japan.
The Standard & Poor’s 500 Index fell for the second time in three days since climbing within 1 percent of its all-time high. Energy companies and miners led declines in the Stoxx Europe 600 Index. Crude futures fluctuated near $43.50 a barrel in New York after briefly erasing losses, while U.S. natural gas futures slid from a 10-week high. The yen strengthened after tumbling on Friday by the most since 2014.
“The market is at an important juncture — this is the third time in the last 15 to 18 months that we’ve been near record levels in major indexes,” said Matt Maley, an equity strategist at Miller Tabak & Co. LLC. “Earnings are going to be the big focus this week. People will be closely watching the BOJ meeting on Thursday.”
The price of crude set the tone on equity markets on Monday, whipping shares as energy investors assess reports that Saudi Arabian Oil Co. plans to expand a major field while Iran increases output into an already saturated market. Market attention will also turn this week to corporate results from blue chips including Apple Inc., Amazon.com Inc. and Boeing Co. Investors will be on the lookout for shifts in rate guidance after the Federal Reserve’s meeting on Wednesday, while most economists predict monetary stimulus will be stepped up by the Bank of Japan.

Stocks
The S&P 500 retreated 0.3 percent at 9:31 a.m. in New York, after a lackluster end to last week on investor concern about earnings. The Nasdaq 100 Index lost 0.3 percent after technology shares tumbled the most in two weeks on Friday amid disappointing results from Microsoft Corp. and Google parent Alphabet Inc.
The Stoxx Europe 600 Index dropped 0.6 percent. Anglo American Plc, BHP Billiton Plc and Rio Tinto Group lost at least 4 percent, leading miners to the biggest decline of the 19 industry groups on the equity benchmark. BP Plc dragged oil companies lower as crude slid.
Automakers extended their drop into a second day, with Volkswagen AG and Daimler AG falling more than 1 percent. Royal Philips NV slid 5.4 percent after saying it is considering an initial public offering of its lighting business, as it reported better-than-estimated quarterly profit.
The MSCI Emerging Markets Index fell for a second day, losing 0.6 percent. Shares in India, Indonesia and Poland slid at least 0.6 percent.
Gulf stock rallied, sending the Bloomberg GCC 200 Index up 0.9 percent, after Saudi Arabian television reported King Salman approved plans for reducing the kingdom’s reliance on revenue from crude exports.
Hanjin Shipping Co. plunged by a record 30 percent in Seoul after South Korea’s largest container carrier said it would seek to restructure its debt.

Currencies
The yen strengthened 0.8 percent to 110.90 a dollar, as traders dialed back bets on what degree of additional stimulus is expected from the Bank of Japan may weaken the currency. Japan’s currency slid 2.1 percent on Friday as Bloomberg reported the BOJ may consider helping banks lend by offering a negative rate on some loans.
“The BOJ is already so long into ‘the reflationary trade’ that it has to continue to deliver further accommodation for the time being,” Goldman strategists Silvia Ardagna, Robin Brooks and Michael Cahill wrote in a report. Authorities will probably focus more on asset purchases than on interest-rate policy and the yen will probably weaken to 130 in a year, they said.
The British pound rose to a ten-week high after U.S. President Barack Obama urged U.K. citizens to vote to stay in the European Union in a June referendum. Since the official campaign started just over a week ago, pro-Europeans have taken the lead, with the Bloomberg Brexit Tracker putting the probability of an EU exit at about 20 percent.
The MSCI Emerging Markets Currency Index slipped 0.1 percent, falling for a third day. Mexico’s Peso led declines, losing 0.7 percent, followed by the South African rand, Philippine peso and South Korea’s won.

Commodities
Oil was little changed near the highest close in five months amid signs a global glut will be prolonged as Middle East producers boost supplies. West Texas Intermediate for June delivery lost as much as 2.1 percent to $42.81 a barrel on the New York Mercantile Exchange before fluctuating near $43.50. The contract gained 55 cents to $43.73 on Friday, the highest close since Nov. 10.
The Bloomberg Commodity Index rose 0.2 percent as gold futures for June delivery jumped 1 percent to $1,241.80 an ounce. Silver rallied 1.1 percent to $17.13.
Money managers more than doubled their wagers on a rally for agriculture prices, pushing their holdings to the biggest since July, after betting on declines just last month. With drought in Brazil and flooding in Argentina threatening crops, the weather is getting nasty enough for hedge funds to take notice.

Bonds
Treasuries due in a decade fell for a sixth days, pushing their yield up to 1.89 percent. The rate on similar-maturity Japanese government bonds increased by four basis points to negative 0.08 percent, the highest in more than two weeks.
The yield on Italy’s 10-year bond climbed four basis points to 1.51, the highest since Feb. 26. The yield on the securities climbed 14 basis points last week.
Rates of non-payment on emerging-market high-yield bonds have fallen every month this year to a four-month low of 3 percent in March, according to data compiled by Bank of America Merrill Lynch. That compares with defaults on U.S. high-yield bonds rising to 4.6 percent.