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The Bloomberg Dollar Spot Index advanced 0.4 percent by 7:30 a.m. in New York, with the currency climbing 1.1 percent to 113.60 yen, the most since December 2007. The Stoxx Europe 600 Index fell 0.4 percent and Chinese shares in Hong Kong retreated from the highest level in six weeks. Standard & Poor’s 500 Index futures slipped 0.2 percent after the gauge closed at
an all-time high last week. The ruble depreciated 0.8 percent. Natural gas surged 4.7 percent on forecasts for cold U.S. weather.
The dollar gauge is at a level last seen in June 2010 after U.S. consumer-confidence and manufacturing reports Oct. 31 underscored the strength of the economy and bolstered the case for the Federal Reserve to raise interest rates. An official gauge of Chinese factory output unexpectedly dropped in October, data showed the following day.
“All arguments are in favor of the dollar,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “It’s very clear that the Fed is the central bank that is relatively hawkish. We are seeing underlying dollar strength, and it’s justified.”
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Bonds Gain
The European Central Bank, which meets this week, is also expanding its stimulus efforts by cutting interest rates and starting asset purchases and a targeted loan plan for banks.Treasuries were little changed, with the 10-year note yield at 2.33 percent. The rate on similar-maturity German debt was 0.84 percent. Spanish bonds dropped, with the 10-year rate increasing five basis points to 2.13 percent.
The cost of insuring corporate debt rose. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies increased one basis point to 66, while the region’s high-yield benchmark climbed six basis points to 360.
Three shares declined for every two that advanced in the Stoxx 600, with 13 of the 19 industry groups retreating.
HSBC Holdings Plc (HSBA) fell 1.9 percent. Europe’s largest bank by market value posted lower-than-estimated profit as it set aside more than $1 billion for customer redress and a probe into rigging currency markets.
Ryanair Forecast
Ryanair Holdings Plc (RYA) rallied to a record after raising its full-year profit forecast for the second time this year.Publicis Groupe SA dropped 4.4 percent after agreeing to buy Boston-based Sapient Corp. for $3.7 billion.
Portugal Telecom SA rose for a fifth day as Altice SA offered to buy its Portuguese assets from Brazil’s Oi SA.
The S&P 500 rallied last week, capping a monthly advance and a record close as better-than-estimated earnings and economic data eased concern about the end of Fed bond buying.
The MSCI Emerging Markets Index fell for the first time in five days, losing 0.4 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong’s declined 0.9 percent.
The Chinese government’s Purchasing Managers’ Index was at 50.8 in October, trailing the 51.2 median estimate of analysts in a Bloomberg News survey and compared with September’s 51.1. Readings above 50 indicate expansion.
The ruble retreated to 43.4190 per dollar while the Micex Index of stocks rose 0.3 percent. The dollar-denominated RTS Index slipped 0.9 percent, with trading volume 41 percent less than the 30-day average, according to data compiled by Bloomberg. Trading is less than normal as Russia has public holidays today and tomorrow.
Rebel Elections
Russian-backed rebels held elections in their self-proclaimed people’s republics in eastern Ukraine, a move that the government in Kiev said poses a threat to the peace process. The one-day ballot, designed to pick a head of government as well as local parliament, was only backed by Russia.Ukraine’s July 2017 Eurobond fell, sending the yield 30 basis points higher to 13.69 percent.
Investors pulled money out of U.S. exchange-traded funds that invest in emerging markets last month for the first time since March. Redemptions from ETFs that invest across developing nations as well as those that target specific countries totaled $994.9 million in October compared with inflows of $977.9 million in September, according to data compiled by Bloomberg.
Natural gas rose for a fifth day in New York amid forecasts for unusually chilly weather in the U.S. East that may boost heating demand. West Texas Intermediate crude oil futures added 0.3 percent to $80.77 a barrel in New York, rising for the first time in three days. Brent crude was little changed at $85.96 in London. Saudi Arabia is set to announce crude-export prices for next month after charging the least in almost six years for some November shipments to Asia.
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