The yen strengthened and European stocks fell from a one-month high after an earthquake hit Japan. US index futures were little changed before Alcoa Inc reports earnings, while energy led commodities lower.
The yen appreciated against all of its 16 major peers at 8:30 am in New York, while the euro dropped 0.4 per cent a dollar. The Stoxx Europe 600 Index lost 0.3 per cent and Standard & Poor’s 500 Index futures rose 0.1 per cent. The US 10-year treasury yield increased two basis points. The S&P GSCI index of 24 commodities slid 0.6 per cent, and oil sank 0.9 per cent.
The US Geological Survey said the 6.6-magnitude quake hit Japan’s Tohoku region, southwest of Iwaki, the latest aftershock to strike the country following the March 11 disaster that killed more than 27,300 and caused radiation leaks at the Fukushima Dai-Ichi nuclear plant. Alcoa, the largest US aluminum producer, might say first-quarter profit tripled on higher metals prices, analysts said in a Bloomberg survey before the company announces results on Monday, unofficially marking the start of the earnings season.
“There is a real battle taking place in investors’ minds,” said London-based Henk Potts, an equity strategist at Barclays Wealth in London, which oversees $239 billion. “There is the potential to be distracted by macro events, whether natural disasters or political unrest, against a still pretty bright corporate picture.”
The yen appreciated 0.5 per cent a euro and strengthened 0.1 per cent against the dollar. The 10-year treasury yield rose to 3.6 per cent. The difference in yield between 10-year indexed-linked bonds and nominal 10-year treasuries, a gauge of investor inflation expectations, was little changed 2.6 per cent, near the highest in more than three years.
CUTTING FORECASTS
The International Monetary Fund lowered its forecasts for economic growth in the US and Japan, a german government official said on Monday in Berlin, without giving the growth forecasts.
Damage from Japan’s earthquake and tsunami a month ago probably amounted to between three and five per cent of the nation’s gross domestic product, the official said on condition of anonymity before the IMF publishes its World Economic Outlook later on Monday in Washington.
Two stocks fell for every one that advanced in the Stoxx Europe 600. Daimler AG and Renault SA led carmakers to the biggest decline among 19 industry groups as the China Association of Automobile Manufacturers said sales may grow at a slower pace than previously forecast this year. Credit Suisse Group AG downgraded the sector to “benchmark,” saying it’s cautious on stocks that are more reliant on economic growth.
HOCHTIEF, ALCOA
Hochtief AG, Germany’s largest publicly traded builder, tumbled 8.8 per cent after saying pretax profit may fall about 50 per cent this year.
The gain in S&P 500 futures indicated the gauge will pare last week’s 0.3 per cent decline. Alcoa rose 0.8 per cent in Germany. Other companies in the S&P 500 scheduled to report results this week include JPMorgan Chase & Co., Bank of America Corp. and Google Inc.
Tyco International Ltd. gained 8.7 per cent in pre-market trading after said three people with knowledge of the matter Schneider Electric SA is weighing a takeover offer. NYSE Euronext was little changed in Paris after rejecting Nasdaq OMX Group Inc.’s unsolicited bid in favor of its $9.67 billion merger agreement with Deutsche Boerse AG.
The German 10-year bund yield advanced one basis point to 3.49 per cent, after climbing to 3.50 per cent, the first time since August 2009. Portuguese bonds were little changed, with the 10-year yield one basis point lower at 8.65 per cent before the nation’s aid negotiations start. The International Monetary Fund said yesterday that the Iberian government asked it to join the rescue talks.
