Stocks slid with U.S. equity-index futures and the yen advanced with Treasuries as evidence of limp economic growth around the world permeated through global financial markets.
Europe’s main stock-market index tumbled for a third day. The Japanese currency rose against all of its major counterparts except the Swiss franc. Gold advanced to a 15-month high and oil fell toward $44 a barrel. Copper dropped from the highest close in five weeks and the Australian dollar tumbled against its major peers after the central bank unexpectedly cut interest rates, dragging the currencies of South Africa and Mexico lower.
While monetary easing in the Asia-Pacific region and Europe helped global equities and commodities recover from multi-year lows since February, economic data remain subdued, as highlighted Tuesday by Chinese and U.K. releases. Citigroup Inc.’s Economic Surprise Index for the U.S., which measures the strength of data relative to analysts’ forecasts, fell to its lowest level since February. Corporate earnings are adding to the gloom, with analysts predicting an 8 percent decline in profits for companies in the S&P 500 Index.
“Weak earnings and a strong euro are the main triggers for the market being down today,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn, Germany. “What markets need most right now is to see better numbers from the economic indicators in Europe and a better view from companies on their future earnings.”
The Stoxx Europe 600 Index tumbled 1.4 percent by 8:52 a.m. New York time, as as all industry groups retreated. A rally in European shares has lost momentum since reaching a three-month high on April 20. Analysts have slashed profit projections for Stoxx 600 firms this year, reversing earlier calls for growth to forecast a decline.
UBS Group AG fell 7.2 percent after reporting worse-than-forecast first-quarter net income. Commerzbank AG lost 8.3 percent after its profit more than halved. HSBC Holdings Plc fell 1.2 percent after posting a drop in profit. BNP Paribas SA climbed 0.4 percent after announcing a surprise increase in income.
A gauge of Asian equities that excludes Japan, where markets are shut until Friday, declined for a fifth day. Benchmarks retreated in Hong Kong, Singapore and Taipei, while gains were seen in Seoul and Shanghai. Australia’s S&P/ASX 200 Index jumped 2.1 percent, the most since February.
S&P 500 futures retreated 0.6 percent, indicating U.S. equities will resume losses after Monday’s rebound.
More than 115 of S&P 500 companies, including Pfizer Inc., Priceline Group Inc. and Whole Foods Market Inc. are scheduled to report financial updates this week.
The yen advanced 0.4 percent to 105.86 per dollar, having been at 105.55, its strongest level since October 2014. The franc advanced 0.3 percent to 1.0971 per euro. Europe’s common currency gained 0.2 percent to $1.1553.
The Aussie slid 1.8 percent to 75.26 U.S. cents. Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent, as predicted by 12 of 27 economists in a Bloomberg survey. Australia would benefit from a weaker currency as it seeks to kick-start a revival in industries outside mining, where an investment boom is halfway through unwinding. “They’re saying that there’s no point in messing around, let’s get in and do this, cut the cash rate and get some of the speculative money out of the Australian dollar,” said Chris Weston, chief market strategist at IG Ltd. in
The rand depreciated 1.7 percent to 14.5120 per dollar, the Mexican peso lost 1.2 percent and Russia’s ruble slid 2.2 percent in offshore trading. The MSCI Emerging Markets Currency Index fell 0.4 percent.
Copper fell after a private Chinese factory gauge showed contraction for a 14th month and U.S. manufacturing growth cooled. In the U.K., a similar gauge showed a contraction shrank for the first time in three years in April.
Iron-ore futures in Asia tumbled as rising port inventories in China, the biggest buyer, hurt prices. Benchmark steel rebar and coking coal also retreated. Gold prices pushed above $1,300 an ounce on speculation that the U.S. central bank will be slow to tighten policy further, bolstering the metal’s appeal as the dollar sagged. Bullion for immediate delivery traded for $1,297.50 an ounce after earlier touching $1,301.89, according to Bloomberg generic pricing. It’s gained 22 percent this year. West Texas Intermediate crude was at $44.37 a barrel, down 0.9%.
Treasury 10-year note yields slid seven basis points to 1.81 percent, more than erasing their increase from Monday. Benchmark German 10-year bund yields dropped five basis points to 0.22 percent as the European Commission cut its inflation forecast and warned of slower-than-predicted growth across the 19-nation euro area.
Australia’s bonds rallied after the RBA’s rate decision, pushing the 10-year yield to a three-week low of 2.47 percent.
Greenland Holding Group Co.’s dollar bonds fell to the lowest in more than seven weeks after S&P Global Ratings downgraded the Chinese property developer to junk last week. S&P downgraded its assessment to BB, two steps below investment grade, from BBB-.