Global stocks’ March advance falters; dollar, metals retreat

BLOOMBERG

The March rebound that had the MSCI All-Country World Index on the brink of erasing its losses for 2016 faltered as base metals retreated.
The Stoxx Europe 600 Index fell for the first time in three days, dropping with shares in Tokyo and Hong Kong. U.S. crude recovered, after falling on data showing an increase in American stockpiles. The Bloomberg Dollar Spot Index headed for its worst month since 2010 and Treasury yields were on course for their largest quarterly drop since 2012 after Federal Reserve Chair Janet Yellen reiterated that weaker global growth called for a gradual approach to raising rates. Copper and zinc pared their first quarterly increases since 2014, while gold headed for its biggest three-month gain since 1986.
After central bank stimulus failed to halt a global stock selloff at the start of 2016, investors welcomed the prospect of U.S. rates staying lower for longer. European shares are heading for their first monthly gain since November, although they won’t avoid a quarterly drop. Global equities rose 7.3 percent in March, paring their three-month decline to 0.1 percent as emerging markets outperformed developed peers by the most in seven years. Bonds worldwide bucked predictions for the end of the bull market in debt to post the best start to the year since at least 1996. “Markets do tend to rebound after bad quarters but I’m more in the cautious camp,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “Investors need more economic growth and earnings upgrades and macro data still hasn’t accelerated. Stocks have been stuck in no man’s land for weeks now. We’re bound to get high volatility and low returns in this maturing equity cycle.”

Stocks
The Stoxx 600 slid 0.9 percent at 12:42 p.m. in London, with banks leading declines. Since rebounding 14 percent in five weeks through March 14, the gauge’s advance has stalled, and it is heading for a 7.5 percent quarterly drop. The Standard & Poor’s 500 Index is on course for a 1 percent gain since the start of the year. After beating U.S. equities last year by the most in a decade, European stocks are now trailing them by the most since 2003. This quarter, analysts have slashed profit estimates, now forecasting declines for the year. Fund managers have withdrawn money for seven straight weeks, the longest streak since 2014, according to a Bank of America Corp. note last week.
Bouygues SA lost 3.6 percent and Orange SA dropped 1.8 percent after the two companies extended a deadline to reach an agreement on their wireless-phone merger plan. TUI AG gained 5.4 percent as Europe’s largest tour operator said summer bookings and revenue improved from last year.
S&P 500 futures were little changed after U.S. equities posted a three-day winning streak that pushed the measure to its highest level this year. Investors will look to a report on initial jobless claims for the week to Mar. 26 for indications of the health of the labor market before Friday’s key non-farm payroll data.
The MSCI Asia Pacific Index pared gains to 0.2 percent, and is poised for an 8.3 percent jump in March. The Topix index fell 0.7 percent in Tokyo.

Emerging Markets
The MSCI Emerging Markets Index added 0.4 percent, bringing the gain in March to 13 percent, the biggest monthly advance since October 2011.
In March, Egyptian stocks have performed the best worldwide, up 22 percent, followed by Brazil’s Ibovespa with a 20 percent advance. Russia’s dollar-denominated RTS Index and the Hang Seng China Enterprises Index came next with 13 percent gains.
A Bloomberg gauge of 20 developing-nation exchange rates added 0.2 percent on Thursday, with South Korea’s won and Malaysia’s ringgit leading gains, strengthening 0.7 percent.
The currency gauge jumped 5.7 percent in March. Brazil’s real and the ruble topped the list, both advancing 11 percent. The real has been bolstered by speculation that President Dilma Rousseff will lose her battle to avoid impeachment and a new government will be able to support growth, while a rally in oil supported the ruble.
The Shanghai Composite Index was little changed on Thursday. The gauge gained 12 percent in March, paring losses for this year to 15 percent. Hong Kong’s Hang Seng China Enterprises Index added 0.3 percent, entering a bull
market.
In the quarter, the offshore yuan headed for the strongest performance in more than four years as Chinese policy makers talked up the currency, intervened in the market and choked the supply of cash to burn speculators. The yuan traded in Hong Kong strengthened 0.08 percent on Thursday, extending its gain for the quarter to 1.51 percent. That’s the most since the three months through December 2011. The yuan in Shanghai advanced 0.43 percent, the first gain in four quarters.
The ringgit extended its climb into a fourth day, rising 0.4 percent. Malaysia’s currency has jumped 9.5 percent this quarter, on track for its best such performance since 1973 amid crude’s rally from an almost 13-year low. Malaysia is the Asian region’s only major net exporter of oil.
South Africa’s rand advanced 1.5 percent after the country’s highest court ruled that President Jacob Zuma violated the constitution by not repaying taxpayer money spent on upgrading his private home.

Currencies
Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, slipped 0.4 percent, for a fourth day of declines. The index has lost 4.1 percent this month, its steepest drop since September 2010. It is heading for its worst quarter since 2010.
“The dollar is overvalued, particularly against the major currencies, euro and yen,” said Steven Saywell, BNP Paribas SA’s global head of foreign-exchange strategy in London, in an interview on Bloomberg TV.
The yen, regarded as a haven investment along with gold and government debt, held steady at 112.44 per dollar. After the ringgit, Japan’s currency is the best performer in Asia this quarter, with volatility at the start of the year burnishing its appeal.

Commodities
West Texas Intermediate crude erased losses of as much as 2 percent, rising 0.2 percent to $38.41 a barrel. Brent rebounded 1.3 percent to $39.75. Both are heading for their first quarterly increases since 2015.
Inventories expanded for a seventh week to 534.8 million barrels, according to a report from the Energy Information Administration Wednesday, while imports and production dropped. Ecuador and Venezuela will support a cut to output at a meeting between major exporters in Doha next month, Ecuador’s Oil Minister Carlos Pareja said in a post on the ministry’s Twitter account.Gold for immediate delivery added 1 percent to $1,237 an ounce, after sliding 1.4 percent last session, while copper declined with zinc, nickel and lead in London.

Bonds
The yield on 10-year U.S. Treasuries slipped one basis point to 1.82 percent, and has plunged about 47 basis points since the end of last year. Two-year yields dropped one basis point to 0.75 percent, having reached the lowest since Feb. 26.
Futures now show no chance of the U.S. central bank altering monetary policy at its April meeting and only 20 percent odds of a rate increase in June.
Germany’s benchmark 10-year bond yield fell one basis point to 0.15 percent, down 48 basis points for the quarter, which would be the most since 2011.