European stocks tracked Asia shares lower as the U.S. dollar weakened against most peers and gold climbed. The ruble plunged as Russian hackers were accused of stealing data from five banks and the U.S. said Moscow may be directing rebels in Ukraine.
The Stoxx Europe 600 Index slid 0.2 percent by 8:18 a.m. in London, while futures on the Standard & Poor’s 500 fell 0.1 percent and 30-year Treasury rates held near a 15-month low. The MSCI Asia Pacific Index retreated 0.3 percent. Gold and silver rose a third day. The euro strengthened 0.2 percent as the Bloomberg Dollar Spot Index slid 0.1 percent. The ruble weakened against all major currencies. The yield on 10-year (GSPG10YR) Japanese government bonds dropped to a fresh 16-month low.
Russia said it was watching a build up of NATO troops near its border while the U.S. said Moscow may be directing separatist rebels in Ukraine. Bond yields from Spain to Germany reached all-time lows yesterday amid speculation the European Central Bank is preparing to boost stimulus. Chinese industrial-profit growth slowed to 13.5 percent in July, data today showed before Germany reports on unemployment and the U.S. updates markets on economic growth.
“The global bond rally has gone a long way in quite a short period of time, obviously driven by Europe and increased speculation over measures from the ECB,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. “A discussion over both timing and what exactly those measures are going to be has dominated markets and set the tones for all markets globally.”
Rates on 10-year bonds from Spain, Italy, Ireland and Germany dropped to records last session as data showed French factory confidence fell to a 13-month low and a measure of German consumer sentiment slid more than analysts predicted. The reports fueled bets ECB President Mario Draghi may introduce quantitative easing to stimulate growth and ward off deflation.
Ten-year Japanese government notes climbed, with the yield falling to 0.485 percent, the lowest level since April last year. Yields on 10-year New Zealand bonds due in a decade fell four basis points, or 0.04 percentage point, to 4.09 percent.
Similar-maturity Treasury rates were little changed at 2.35 percent, after dropping four basis points in New York, while yields on 30-year debt held at 3.10 percent following a six basis-point drop yesterday to the lowest level since May last year.
“Although the Bank of Japan and the Fed will move sentiment in markets globally, we are watching one bank and one bank only: the ECB,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients.
Gold gained 0.4 percent to $1,287.90 an ounce, while silver added 1 percent to $19.6499 per ounce. The Bloomberg Dollar Spot Index dropped a third day as the euro climbed 0.1 percent to $1.3204.
The British pound, Swiss franc, and the currencies of Australia, New Zealand, Denmark and Canada all climbed at least 0.1 percent.
Russia’s ruble retreated 0.5 percent to 36.341 per dollar and 0.6 percent to 48.0125 per euro. The Micex Index in Moscow fell 0.9 percent. Aeroflot – Russian Airlines dropped 2.8 percent after announcing it swung to a 1.9 billion ruble ($52.4 million) loss in the first half from a profit a year earlier.
A buildup of NATO forces near Russia’s border is unjustified and the country will do whatever is needed to ensure its safety from all threats, Interfax reported, citing Alexander Grushko, Russia’s ambassador to NATO.
Russian hackers attacked JPMorgan Chase & Co. and at least four other banks this month in a coordinated assault that resulted in the loss of gigabytes of customer data, according to two people familiar with the investigation.
Jen Psaki, the U.S. State Department spokeswoman, cited the reports of fresh fighting, telling reporters in Washington yesterday that “these incursions indicate a Russian-directed counteroffensive is likely under way in Donetsk and Luhansk,” cities in the east. Russian President Vladimir Putin’s spokesman, Dmitry Peskov, said that “this information doesn’t correspond with reality.”
The government in Kiev said the fighting, which has claimed more than 2,000 lives according to the United Nations, has spread to the shores of the Sea of Azov, effectively opening a new front.
Euro-region inflation numbers are due tomorrow, with policy makers next scheduled to review rates Sept. 4. Consumer prices in Spain fell 0.5 percent this month, the most since 2009. The extra yield on Treasuries over their Group-of-Seven counterparts was 79 basis points yesterday, near the widest margin since June 2007.
Federal Reserve Chair Janet Yellen, who is already paring back unprecedented U.S. stimulus measures, said on Aug. 22 that while slack remains in the labor market, the timeline for rate increases could be brought forward under the right circumstances.
An auction of $35 billion in five-year Treasury notes yesterday drew the highest demand in more than a year from an investor class including foreign central banks as the debt yielded nearly the most in nine years over its German equivalent. A two-year auction earlier in the week drew close to the highest yield in three years amid prospects the Fed may raise interest rates from zero sooner than investors predict.
The Topix slid 0.4 percent and the Nikkei 225 Stock Average sank 0.5 percent. The yen rose 0.1 percent to 103.78 per dollar after gaining 0.2 percent yesterday.
South Korea’s Kospi erased an earlier gain to close little changed. Samsung Electronics Co. added 1 percent. Apple Inc. failed again to win a sales ban on Samsung products found to infringe its smartphone patents, even after requesting what it described as a more limited prohibition.
Hong Kong’s Hang Seng Index fell 0.7 percent, falling a third day, while a gauge of Chinese companies in the city slumped 1 percent. The Shanghai Composite Index slid 0.6 percent.
China’s statistics office said industrial-company profits expanded by 13.5 percent in July after a 17.9 percent increase in June that was the fastest rate of growth since September last year.
New home-sales data in Australia fell 5.7 percent in July, while the Philippines said second-quarter gross domestic product jumped 6.4 percent from a year before, exceeding the 6.1 percent median projection of economists surveyed by Bloomberg.