US stocks retreat as yen climbs with gold on growth concern

BLOOMBERG

U.S. stocks slipped, gold rallied and the yen strengthened to a 17-month high amid renewed concern that central bank policies have failed to revitalize growth.
The Standard & Poor’s 500 Index retreated into the middle of range that’s bound trading since the Federal Reserve’s March 16 meeting, while European equities reversed gains as bank shares slid. Gold rose after minutes of a Federal Reserve meeting reaffirmed U.S. policy makers aren’t rushing to raise interest rates. The yen climbed against the dollar.
Fed officials highlighted persistent risks facing the global outlook and the threats these posed to the relatively healthy American economy at their March meeting, while the head of the International Monetary Fund signaled on Thursday the organization is likely to lower its outlook for global growth next week. Stimulus from Asia to Europe has thus far failed to spark sustained price gains that would indicate robust economic expansion.
“There’s a bit of a risk-off trade going on,” Don Ellenberger, senior portfolio manager at Federated Investors, said by phone. “There’s so much negative sentiment in the market right now, you can see it when you look at the money that’s poured out of equity funds. It’s hard to define a clear trend right now without a whole lot going on but if you look around the market, earnings is something everyone’s focused on.”

Stocks
The S&P 500 slipped 0.5 percent to 2,055.47 at 9:31 a.m. in New York, retreating after the biggest gain in almost a month. Equities have made little progress since snapping a five-week winning streak last month that erased losses from the worst-ever start to a year.
The S&P 500 has traded in a 35-point range since the Fed’s March 16 meeting, remaining within 1 percent of the 2,050 level over the past three weeks, as sentiment has lurched from optimism that central-bank policies will buttress global growth to worry their efforts may not be potent enough to fend off a slowdown.
The Stoxx Europe 600 Index dropped 0.3 percent. Bank stocks were among the biggest decliners in Europe, dragged down by Italian lenders. Drugmakers were headed for the highest levels in a month, with AstraZeneca Plc set for its biggest two-day surge since November, and Shire Plc for its highest price since January.
The MSCI Emerging Markets Index of stocks was little changed after two days of declines.

Currencies
The yen appreciated at least 0.8 percent against its 16 major peers, climbing 1.3 percent to 108.42 per dollar at 8:34 a.m. in New York.
“The yen is being driven higher by risk aversion and by market participants testing the Bank of Japan’s tolerance toward a stronger currency,” said Thu Lan Nguyen, a foreign exchange strategist at Commerzbank AG in Frankfurt.
The euro weakened against most of its major peers after ECB Executive Board member Peter Praet said the European Central Bank can boost the scale of its support to the euro-area economy yet further in the event that fresh risks to the outlook arise.
The Fed meeting records shed more light on the decision to keep rates unchanged last month. They showed U.S. policy makers debated an April rate hike, though several officials advocated a cautious approach, partly amid worries that slowing world growth could crimp the U.S. economy’s expansion.
Sterling approached the lowest in more than a month as the Dutch vote heightened concern the U.K. may leave the EU. Polls show the June 23 British referendum will be close, causing traders to brace for more volatility amid worries a so-called Brexit would damage the economy. The U.K. currency fell to the weakest level since June 2014 against the euro.

Commodities
Gold for immediate delivery rose 1.3 percent to $1,237.83 an ounce following Wednesday’s 0.7 percent retreat.
Copper for delivery in three months declined with industrial metals on the London Metal Exchange. Nickel and zinc fell on concerns that prospects for the global economy remain fragile.
West Texas Intermediate crude slipped 0.7 percent to $37.47 a barrel following last session’s 5.2 percent jump, its steepest one-day gain since March 16. Brent declined 0.6 percent to $39.61 a barrel.
U.S. crude stockpiles fell 4.94 million barrels last week, data from the U.S. Energy Information Administration showed, after analysts predicted a 2.85 million-barrel gain. Refineries processed the most oil in three months as output and imports slipped.

Bonds
Treasuries gained, with the yield on 10-year notes falling two basis points to 1.73 percent. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said in an annual letter to shareholders that he’s concerned demand for Treasuries will decline and the Fed will raise interest rates faster than people expect.
The U.K. sold 10-year bonds at a record low yield of 1.514 percent at a sale on Tuesday. A measure of demand for the securities climbed to the highest since 2014.
Spain’s 10-year government bond yields climbed to a two-week high as investors bought 3.37 billion euros of conventional securities in an auction. The rate on similar-maturity German bunds dropped one basis points to 0.11
percent.
The nation’s 10-year bonds were sold at a higher yield that at the previous auction on March 17. The yield on the securities has climbed for six days, their longest streak since July 2012. The country, which hasn’t had an elected government since an inconclusive election in December and missed its 2015 budget-deficit goal, also sold inflation-linked debt in the auction of securities due between 2021 and 2046.