Dollar Advances With U.S. Stocks as Oil, Gold DeclineGlenys Sim and Stephen Kirkland
The dollar gained with U.S. stocks as a report showed the American economy grew more than forecast last quarter. Oil slid from a two-year high while European shares rose for the first time in four days.
The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, climbed 0.5 percent and the Standard & Poor’s 500 Index increased 0.2 percent at 4 p.m. in New York. The Stoxx Europe 600 Index added 0.8 percent as Vodafone Group Plc jumped 8.2 percent to an 11-year high. Crude slipped 1.2 percent and gold dropped 0.4 percent. The yield on 10-year Treasuries fell less than one basis point to 2.76 percent, reversing an earlier gain, following a U.S. auction of notes.
U.S. gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, Commerce Department figures showed today. The prospect of an imminent attack on Syria faded as U.K. Prime Minister David Cameron, the U.S.’s top ally, struggled to win parliamentary backing for military strikes that critics said echoed the push to war in Iraq.
“We’re back to focusing on economic data, specifically out of the U.S. and Europe, and the Fed tapering, as the market is coming around to believe the Syrian conflict poses only a short-term risk,” said Manish Singh, who helps oversee $2 billion as head of investment at Crossbridge Capital in London. “I am of the opinion that tapering will happen in September, regardless of data.”
The 2.5 percent growth in GDP compared with a 2.2 percent median estimate of 79 economists surveyed by Bloomberg. The improvement shows the world’s largest economy gaining momentum after a drought, Superstorm Sandy and budget battles in Washington stalled growth in the last three months of 2012. Recent data have shown the labor market is gaining strength while home prices rise, bolstering household finances.
A separate report today showed the number of Americans filing applications for unemployment benefits fell more than forecast last week.
The S&P 500 has fallen 2.8 percent in August amid speculation the Federal Reserve will pare stimulus measures and concern the U.S. will take military action against Syria. The benchmark index has retreated 4.2 percent since its last record on Aug. 2.
Minutes of the Fed’s July meeting released on Aug. 21 showed policy makers supported cuts to the central bank’s bond-buying program this year if the economy improves in line with its forecasts. Fed stimulus helped push the S&P 500 up as much as 153 percent from its March 2009 low, data compiled by Bloomberg show.
Among stocks moving today, telephone, technology and consumer shares climbed at least 0.4 percent to lead gains in eight of the 10 main industry groups in the S&P 500. Guess? Inc. surged 13 percent as the clothes maker reported second-quarter profit that topped estimates and boosted its full-year forecast.
Trading volume in S&P 500 stocks was 19 percent below the 30-day average at this time of day, with one session left before the Labor Day holiday weekend. Trading on U.S. exchanges is poised for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares changed hands each day this month. That’s about 50 million shares more than last August.
Almost three shares advanced for every one that fell in the Stoxx 600, and the gauge was up 0.2 percent for the month. Vodafone surged after the mobile-phone company said it’s in discussions with Verizon Communications Inc. over a sale of its 45 percent holding in their Verizon Wireless venture to the U.S. carrier. Verizon Communications rallied 2.7 percent in U.S. trading.
Carrefour SA climbed 5.6 percent as France’s largest retailer posted increased first-half profit. WPP Plc, the world’s biggest advertising company, advanced 4.2 percent after reporting a gain in sales.
The Bloomberg U.S. Dollar Index reached the highest level in four weeks. The currency gained against 13 of its 16 major peers, advancing 0.7 percent to $1.3243 per euro. The greenback advanced 0.6 percent to 98.26 yen after gaining 0.6 percent yesterday. The yen added 0.1 percent to 130.13 per euro.
The MSCI Emerging Markets Index climbed 1.1 percent, trimming its monthly loss to 2.9 percent. The Philippine Stock Exchange Index jumped 3.6 percent, snapping a two-day, 6.9 percent slump, as the economy grew for the fourth straight quarter, beating analysts’ estimates. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.9 percent.
India’s rupee climbed 3.2 percent and the Sensex gauge of equities rose 2.3 percent. The central bank said it will sell dollars to the nation’s biggest oil importers to cool demand for foreign exchange. The South Korean won climbed 0.2 percent against the dollar after Finance Minister Hyun Oh Seok said a widening current-account surplus would buoy the currency.
The S&P GSCI gauge of 24 commodities dropped 0.8 percent, the first decline in six days. West Texas Intermediate crude declined 1.2 percent to $108.80 a barrel as concerns eased over the prospects of an imminent military strike against Syria. Oil futures climbed to $110.10 yesterday, the highest close since May 3, 2011.
Britain released an assessment showing it “highly likely” the Syrian government was behind the mass killing of civilians with chemical weapons on Aug. 21 near Damascus. Still, Cameron bowed to opposition demands to await a judgment by on-site United Nations inspectors.
Likewise, the Obama administration is laboring to marshal conclusive evidence backing its assertions that Syrian President Bashar al-Assad was directly responsible for the attack, said three intelligence officials familiar with the situation.
Gold slipped 0.4 percent, the most in more than two weeks, after reaching a three-month high yesterday. The precious metal has tumbled 16 percent this year on speculation that the Fed will slow the pace of the stimulus. Copper fell 1.5 percent.
Treasuries erased losses after the U.S. sale of $29 billion in seven-year notes produced a lower-than-forecast yield. The notes drew a yield of 2.221 percent, compared with a forecast of 2.232 percent in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers.
Italian 10-year bonds advanced for a second day amid speculation easing political tension in the nation will boost investor demand at a 6 billion-euro ($7.96 billion) debt sale today. Italy’s government, led by Prime Minister Enrico Letta, yesterday agreed to a compromise on a property tax in a deal that may mend relations with Silvio Berlusconi, his partner in the coalition.
The yield on the securities fell four basis points to 4.37 percent. Italy sold 6 billion euros ($8 billion) of five and 10-year securities, matching its maximum target.