Oil and corn led a retreat in commodities while U.S. stocks capped the worst weekly loss since August. The yen rebounded after touching a five-year low while Treasuries advanced.
Oil slipped 0.9 percent to a 10-day low of $96.60 a barrel after falling demand boosted fuel inventories. Corn slid 2 percent to lead the S&P GSCI Index to a third day of losses and natural gas dropped from a two-year high. The Standard & Poor’s 500 Index slipped less than 0.1 percent, closing at a one-month low and posting a 1.6 percent loss for the week. The yen climbed 0.2 percent to 103.17 per dollar after reaching 103.92, the weakest level since October 2008. Ten-year Treasury yields fell one basis point to 2.87 percent after two days of gains.
Stocks worldwide also capped the biggest weekly decline since August, with the MSCI All-Country World Index down 1.5 percent in five days, as signs of improvement in the U.S. economy spurred concern the Fed will rein in stimulus at next week’s meeting. JPMorgan Chase & Co. predicted the S&P 500 will rally 17 percent by the end of next year as monetary policy remains accommodative.
“The market has had trouble continuing its forward momentum in the last couple weeks,” Michael Levine, vice president and money manager of Oppenheimer Funds Inc., which oversees $227.37 billion in assets, said in a telephone interview. “People are somewhat concerned about tapering happening sooner rather than later, although that should be priced into the market around now. I personally think tapering and higher interest rates in response to a stronger economy is a good thing, but certainly there’s a headwind there.”
The House passed the first bipartisan U.S. budget in four years yesterday, clearing the way for final Senate passage next week to ease $63 billion in spending cuts and avert another government shutdown. U.S. producer prices decreased 0.1 percent in November from the previous month and were 0.7 percent higher than last year, trailing economists’ estimates.
The S&P GSCI Index slipped 0.5 percent as 13 of its 24 commodities declined. Crude oil capped its eighth weekly drop in the past 10. Stockpiles of gasoline and distillate fuels, including diesel and heating oil, jumped the most last week since Jan. 4, the Energy Information Administration reported on Dec. 11.
“Demand is weak and if we don’t see it become stronger, the market will come under pressure,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Products are being put into storage, basically driving the market lower. The market is concerned about Fed tapering.”
Gold futures climbed 0.8 percent to $1,234.60 an ounce after sliding 2.6 percent yesterday. U.S. natural gas slipped 0.5 percent after closing yesterday at the highest price since July 2011 on forecasts for colder-than-normal weather.
Japan’s currency appreciated versus 10 of 16 major peers. The yen posted its seventh straight weekly decline versus the dollar as the yield advantage of Treasuries over Japanese debt approached the widest since April 2011. The currency was up 0.3 percent against the European currency after losing as much as 0.5 percent to 142.83 per euro, the weakest since October 2008
The U.S. 10-year yield has risen 12 basis points this month. Its premium over similar-maturity Japanese bonds was 2.17 percentage points, near the 2 1/2-year high of 2.24 reached on Dec. 5.
The Australian dollar capped an eight straight weekly loss versus the U.S. currency, its longest slump since 1985, as Governor Glenn Stevens intensified his efforts to talk down the currency by signaling a weaker Aussie is preferable over lower interest rates to help spur the nation’s slowing economy. The Aussie rebounded today and rose 0.3 percent after touching a more-than three-month low of 89.10 U.S. cents.
The Fed will probably start reducing its $85 billion of monthly bond purchases at next week’s meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent in a Nov. 8 poll. A tapering of the Fed’s asset purchases would curb the supply of cheap dollar financing that has spurred demand for higher-yielding assets globally.
“With the prospect of tapering only days to weeks away, the global effect is starting to ramp up,” said Evan Lucas, Melbourne-based market strategist at IG Ltd. “It will cause short-term vibrations.”
The S&P 500 for a fourth straight session and has lost 1.8 percent from its last record on Dec. 9. The gauge still has risen more than 24 percent this year and is heading for its biggest annual advance in a decade.
Among stocks moving today, Adobe Systems Inc. jumped 13 percent as the company attracted more subscribers to its online software in the fourth quarter than some analysts had projected. Anadarko Petroleum Corp. tumbled 6.4 percent as a judge ruled it may have to pay as much as $14 billion in a case related to the spinoff of Tronox Inc.
The S&P 500 may climb 17 percent to 2,075 by the end of next year as profit growth accelerates and U.S. monetary remains supportive, Thomas Lee, JPMorgan Chase’s chief U.S. equity strategist, wrote in a research report today. Large technology companies provide the most attractive opportunity for outperformance, he said.
The Stoxx Europe 600 Index slipped 0.2 percent today to close at the lowest level since Oct. 9. The regional benchmark slid 2.1 percent in the past five days for a second straight weekly decline.
AstraZeneca Plc gained 1.8 percent after a diabetes pill from the company and Bristol-Myers Squibb Co. won the backing of U.S. advisers. Sandvik AB climbed 1.8 percent after Deutsche Bank AG recommended buying the stock.
RSA Insurance Group Plc lost 7.2 percent after its chief executive officer resigned as an investigation into accounting practices at its Irish unit forced the insurer to increase reserves. PSA Peugeot Citroen slumped 12 percent as General Motors Co. said it is selling its entire stake in the French carmaker.
The MSCI Emerging Markets Index slipped 0.1 percent today and lost more than 1 percent this week with benchmark gauges in Thailand and India slumping. The SET Index in Bangkok dropped 1.1 percent today to its lowest level in more than three months. India’s S&P BSE Sensex Index fell 1 percent, taking its four-day retreat to 2.9 percent.
Foreign investors appear to be selling more Thai equities on concern about a deadlock in domestic politics, said Athaporn Arayasantiparb, head of research at UOB Kay Hian Securities (Thailand) in Bangkok.