U.S. index futures rose on speculation policy makers will do more stimulate the economy. Commodities dropped for a fourth day and Spanish bonds fell.
Standard & Poor’s 500 Index futures added 0.4 percent at 8:30 a.m. in New York, paring gains of as much as 0.7 percent. The Stoxx Europe 600 Index increased 0.3 percent. The yen weakened against all but two of its 16 major peers. Treasuries snapped a three-day gain. Spanish bonds fell, pushing 10-year yields toward the highest since November. The S&P GSCI gauge of 24 raw materials slipped 0.5 percent, bringing the drop to 19 percent from this year’s high. Oil in London slid 1.1 percent, and prices for French and German electricity fell to records.
Federal Reserve Bank of Chicago President Charles Evans said he would support more stimulus. Italy plans to auction at least 9.5 billion euros ($11.9 billion) of debt this week as yields climb for Europe’s most-indebted countries following Spain’s request for a bailout. Greece holds elections June 17 that may determine the country’s future in the euro.
“There is hope,” said Jerome Forneris, who helps manage $8.5 billion at Banque Martin Maurel in Marseille. “Until the Fed meets, investors will speculate. It’s a very important factor of support for U.S. and European stocks. It wouldn’t surprise me to see a strong announcement from the Fed to boost the U.S. economy.”
The advance in U.S. futures indicated the S&P 500 will rebound following yesterday’s biggest decline in more than a week. The Fed is scheduled to meet next week and announce its rate decision on June 20.
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio.
The Stoxx 600 (SXXP) advanced even as two shares fell for every one that advanced. Lafarge SA (LG) gained 1.5 percent as the world’s biggest cement maker said it plans to make cost savings of 1.3 billion euros by 2015.
Spain’s 10-year bond yield climbed for a third day, rising 15 basis points to 6.66 percent. It reached 6.7 percent on May 30, the highest since Nov. 28. The cost of insuring against a Spanish default also rose for a third day, with credit-default swaps on the nation increasing nine basis points to 604. The price jumped to a record 613.5 basis points on June 1.
Italy’s 10-year yield increased 12 basis points to 6.15 percent after reaching 6.2 percent, the highest since January. Germany’s 10-year bund yield climbed seven basis points to 1.37 percent, with France’s yield rising 10 basis points to 2.66 percent.
Ratings at Risk
Fitch Ratings said nations face downgrades as policy makers fail to demonstrate they can end the euro-area’s debt crisis. Ratings in the currency bloc are under “strong downward pressure,” Fitch Managing Director Ed Parker said in Oslo today.
The European Financial Stability Facility plans to raise at least 1 billion euros through a sale of bonds due April 2037 as banks in Norway and Germany sell relatively safe covered bonds after yesterday’s surge in non-financial deals.
The yield on 10-year U.S. Treasuries climbed two basis points to 1.61 percent.
The yen slipped less than 0.1 percent against the dollar and 0.2 percent versus the euro after the International Monetary Fund said Japan’s currency was overvalued. The euro appreciated 0.1 percent to $1.2492. The New Zealand dollar strengthened against all 16 of its major peers.
The Hong Kong dollar gained as much as 0.09 percent against the U.S. currency, the most since March 8 on a closing basis, after Joseph Yam, the former Hong Kong monetary chief who helped introduce a dollar peg in 1983, said the city should review its currency policy. The currency pared gains as Financial Secretary John Tsang said there’s no need to change the peg and Chief Executive-elect Leung Chun-ying said he has no plans to do so.
Brent oil dropped for a fourth day to $96.89 a barrel as OPEC ministers gathered in Vienna for a meeting on June 14 to decide on output levels for the second half of the year. The European benchmark contract for German power slid as much as 0.4 percent to 47.75 euros a megawatt-hour, according to broker data compiled by Bloomberg. French electricity for 2013 declined 0.6 percent to 48.90 euros a megawatt-hour, the lowest since the contract began trading in September 2009.
Wheat advanced 1.2 percent in Chicago, the second consecutive gain, before today’s U.S. Department of Agriculture crop report, the first to be published during trading hours on the Chicago Board of Trade.
The MSCI Emerging Markets Index (MXEF) fell 0.5 percent, after closing yesterday at the highest level since May 29. The Shanghai Composite Index, South Korea’s Kospi and Taiwan’s Taiex Index slid at least 0.7 percent. The ISE National 100 Index (XU100) advanced 0.7 percent as Tupras Turkiye Petrol Rafinerileri AS (TUPRS) jumped 1.6 percent after the U.S. said Turkey was among nations that would be exempt from sanctions for buying Iranian oil. Poland’s WIG20 Index and India’s Sensex Index climbed more than 1 percent.
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net