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The MSCI All-Country World Index lost 0.6 percent at 11:29 a.m. in London, heading for its worst week since March. The Stoxx Europe 600 Index slid 1.4 percent, and Standard & Poor’s 500 Index futures dropped 0.7 percent. Corporate credit risk in Europe climbed for a fourth day. Treasury 10-year yields climbed two basis points to 2.58 percent, while the Bloomberg Dollar Spot Index rose to a four-month high. Oil fell 0.9 percent, and copper declined 0.5 percent.
Investors are looking to today’s U.S. payrolls report as they speculate over the timeline for Federal Reserve interest-rate increases after faster-than-estimated economic and wage growth. The International Swaps & Derivatives Association will meet at 11 a.m. New York time to determine whether credit-default swaps linked to Argentina have been triggered by a failure-to-pay credit event. A final reading of European factory output for July came in lower than economists had anticipated, while Chinese manufacturing expanded.
“These are interesting times for markets,” Keith Bowman, an equity analyst at Hargeaves Lansdown Plc in London, said in a phone interview. “Some investors are concerned for a potential interest rate hike, maybe a little bit nearer-term than some people were hoping for. Geopolitical concerns are certainly there in the background.”
Shares Fall
The Stoxx 600 slid today after a 1.3 percent drop yesterday, the biggest since July 8. The gauge has lost 3.2 percent this week and declined 1.7 percent in July, completing its first back-to-back monthly drops since May 2012.All 19 industry groups in the Stoxx 600 fell today.
ArcelorMittal (MT) lost 6.3 percent after the steelmaker lowered its full-year profit forecast. Vinci SA dropped 6.4 percent after Europe’s biggest builder projected a decline in annual revenue.
Iliad SA sank 7.2 percent after the French mobile-phone carrier offered $15 billion for a controlling stake in T-Mobile US Inc. Belgacom SA rallied 6.3 percent after raising its profit forecast.
The volume of Stoxx 600 shares changing hands today was 26 percent greater than the 30-day average, according to data compiled by Bloomberg.
Index Futures
Futures (SPX) on the S&P 500 expiring in September slid today after the index slumped 2 percent yesterday, the most since April. It’s fallen 2.4 percent this week and declined 1.5 percent in July, its first monthly drop since January.The Dow Jones Industrial Average erased its 2014 gain after yesterday’s 1.9 percent drop. Futures on the index fell 0.6 percent today.
“The market is at a point where it’s vulnerable to some sort of correction,” said Chris Green, director of economics and strategy in Auckland at First NZ Capital Ltd. “It’s a reflection of the fact that investors’ risk aversion had been at muted levels and the market had got itself pretty extended.”
The selloff came before the U.S. Labor Department’s employment report, which economists predict will show that companies added 230,000 workers to nonfarm payrolls in July. A measure of wages, the employment cost index, rose 0.7 percent in the second quarter, faster than predicted, data yesterday showed.
Consumer Confidence
A separate report may show the Thomson Reuters/University of Michigan final index of consumer confidence in July fell to 81.8 from 82.5 in June. A third release may show the Institute for Supply Management’s manufacturing index increased in July.Procter & Gamble Co., Chevron Corp. and Clorox Co. are among S&P 500 companies reporting earnings today. About 76 percent of those that have posted results this season have beaten analysts’ estimates for profit, while 65 percent exceeded sales projections, according to data compiled by Bloomberg.
LinkedIn Corp. (LNKD) climbed 5.7 percent in early New York trading after the professional-networking website gave a third-quarter sales forecast that topped estimates.
Today’s decline in Treasuries extended the world’s biggest losses in government bond markets over the past two months. U.S. securities are declining on speculation the Fed is moving closer to closer to raising interest rates as the economy strengthens.
Raising Target
Traders see about 79 percent odds the central bank will raise the target for its benchmark to at least 0.5 percent by September 2015, based on futures contracts. The figure was less than 70 percent on July 1.Spain’s 10-year yield rose five basis points to 2.55 percent and Italy’s increased six basis points to 2.76 percent.
The cost of insuring against losses on corporate debt rose to the highest since May, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies adding almost two basis points to 67 basis points. The gauge climbed almost six basis points this week, the biggest weekly increase since January.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose as much as 0.1 percent to 1,023.31, its highest level since March 20.
West Texas Intermediate oil fell as much as 1.1 percent to $97.09 a barrel, the lowest since Feb. 5. Copper dropped 0.5 percent to $7,077.50 a metric ton.
Emerging Nations
The MSCI Emerging Markets Index lost 0.9 percent, extending losses this week to 2.1 percent. A gauge that tracks the performance of 20 developing-nation currencies against the greenback fell to the weakest level since March as the rupee and the won slid.China’s official manufacturing purchasing managers’ index climbed to 51.7 for July, up from 51 in June and exceeding the 51.4 median estimate of economists surveyed by Bloomberg. The final reading on the HSBC Holdings Plc/Markit Economics China factory PMI was 51.7, missing estimates for it to match the preliminary reading of 52, an 18-month high.
Russian stocks declined as OAO Sberbank and OAO VTB Bank fell after the European Union tightened sanctions against the nation’s biggest lenders. The benchmark Micex Index (INDEXCF) dropped 1.4 percent, following a 6.6 percent slide in July, the worst monthly performance since May 2012.
Argentina’s Economy Minister Axel Kicillof said the government wouldn’t oppose a third-party solution to its dispute with a group of hedge funds who successfully sued the country for $1.5 billion. A U.S. judge has blocked the country from paying its debt -- including an interest payment due July 30 on $13 billion of bonds -- until the hedge funds led by Elliott Management Corp. get their money. Moody’s Investors Service placed the country’s rating on negative outlook.
Argentina Debt
Argentina’s bond prices tumbled yesterday along with the country’s benchmark stock index after Standard & Poor’s said the blown deadline was enough to constitute default on about $13 billion of debt. President Cristina Fernandez de Kirchner said a blocked debt payment doesn’t constitute a default.“Investors have been looking for an excuse to sell,” Angus Gluskie, who helps oversee more than $550 million at White Funds Management in Sydney, said by phone. “We’ve got a range of convenient reasons for investors to take some money off the table. The geopolitical risks have been rising and data flow in the U.S. is suggesting that the Fed may have to raise interest rates sooner rather than later. The Argentine issue is another piece of adverse news flow.”
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