European stocks fell and emerging-market equities retreated to a three-month low while Treasuries advanced. Copper rose after a Chinese factory gauge unexpectedly strengthened.
The Stoxx Europe 600 Index fell 1.1 percent by 10:18 a.m. in London, led by health-care companies. The MSCI Emerging Markets Index dropped 0.5 percent and Standard & Poor’s 500 Index futures declined 0.3 percent. South Africa’s rand strengthened 0.5 percent. Treasury 10-year notes rose for a fourth day. Copper gained 0.3 percent and oil added 0.2 percent.
The Treasury Department announced steps yesterday that will make it harder for U.S. companies to move their address abroad to cut taxes, a practice known as inversions. A euro-area manufacturing gauge slipped more than economists forecast while a similar index for China rose to 50.5, from 50.2. Israel shot down a Syrian fighter jet as the U.S. and allies expanded airstrikes on Islamic State into Syria.
“Inversions are a big political issue for the U.S. and politicians want to address them before midterm elections,” David Wartenweiler, chief investment officer at Habib Bank AG, said by phone from Zurich. “The other issue is that the outlook for Europe is quite bleak.”
The U.S. Treasury inversion rules include a prohibition on “hopscotch” loans that let companies access foreign cash without paying U.S. taxes. They also curb actions that companies can use to make such transactions qualify for favorable tax treatment. The rules will apply to deals that close from yesterday.
Shire Plc, which agreed in July to be bought by AbbVie Inc., dropped 6.3 percent. AstraZeneca Plc (AZN), the London-based drugmaker that was the target of a failed bid by U.S. rival Pfizer Inc., slid 5 percent.
Raiffeisen Bank International AG (RBI), the foreign bank with most at risk in Ukraine and Russia, plunged 11 percent after predicting an annual loss. Tate & Lyle Plc sank 17 percent after the maker of Splenda sweetener forecast annual profit that missed analysts’ estimates.
Yara International ASA jumped 7.9 percent after the Norwegian nitrogen-fertilizer maker said it is in merger talks with CF Industries Holdings Inc. Royal Philips NV advanced 3.2 percent after the 123-year-old company said it will break up to focus on health-care equipment and consumer goods.
The volume of Stoxx 600 shares changing hands today was 29 percent greater than the 30-day average, according to data compiled by Bloomberg. The gauge is heading for its biggest two-day drop in more than six weeks.
Futures (SPX) on the S&P 500 expiring in December fell after the index lost 0.8 percent yesterday, the most since Aug. 5.
South Africa’s rand strengthened to 11.1184 per dollar and the Australian dollar, known as the Aussie, climbed 0.2 percent to 88.90 U.S. cents after slipping to its weakest level since Feb. 4 yesterday. Canada’s dollar added 0.2 percent. The pound fell against all of its 16 major peers, weakening 0.1 percent to $1.6345.
The yield on 10-year Treasury notes fell two basis points, or 0.02 percentage point, to 2.54 percent. The U.S. plans to auction $29 billion of two-year securities today, $35 billion of five-year debt tomorrow and $29 billion of seven-year notes Sept. 25. It will also sell $13 billion of two-year floating-rate securities tomorrow.
Germany’s 10-year yield declined one basis point to 0.997 percent, as bunds were boosted by a reduction in the debt agency’s planned fourth-quarter issuance.
Greek 10-year bonds slid, pushing the yield above 6 percent for the first time since Aug. 15.
Bank borrowing costs fell to a record in Europe, with the average yield investors demand to hold investment-grade financial bonds dropping to 1.25 percent, according to Bank of America Merrill Lynch Euro Financial Index data.
The MSCI All-Country World Index slid 0.2 percent for a third day of losses. The MSCI AC Asia Pacific Index (MXAP) gained 0.1 percent, after closing at its lowest level since June 6.
A preliminary report from Markit Economics showed that a purchasing managers’ index for euro-area manufacturing fell to 50.5 this month from 50.7 in August. Economists in a Bloomberg News survey had forecast a drop to 50.6. Readings above 50 indicate expansion.
A U.S. release may show a preliminary PMI manufacturing gauge rose to 58 in September from 57.9 last month, according to economist forecasts.
Copper rose 0.3 percent to $6,739.50 a metric ton and West Texas Intermediate oil advanced 0.3 percent to $91.10 a barrel. China is the biggest consumer of energy and largest buyer of industrial metals.
The MSCI Emerging Markets Index slipped for a fourth day to the lowest level since June 5. Benchmark gauges in India, South Africa, South Korea, Taiwan, Hungary and the Czech Republic lost at least 0.5 percent.
The Shanghai Composite Index rose 0.9 percent, the most in more than a week, while the Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong slipped 0.3 percent. China’s preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 50.5, compared with the median estimate of 50 in a Bloomberg News survey of analysts and August’s final reading of 50.2.
Russia’s Micex added 0.3 percent, ending a four-day decline to a three-week low. OAO Rosneft, the nation’s biggest oil producer, advanced 0.6 percent, and OAO Gazprom, the largest natural-gas producer, gained 0.6 percent.
OAO Mechel, Russia’s biggest producer of coking coal, tumbled 23 percent, extending a two-day rout to 40 percent. Russia’s economy minister said Sept. 20 that he saw no alternative but bankruptcy for the mining company after nine months of unsuccessful efforts to refinance its debt.
Stocks in the Middle East were mixed. Dubai’s DFM General Index (DFMGI) advanced for a second day, rising 0.7 percent, while Kuwait’s SE Price Index slipped 0.3 percent and Qatar’s QE Index retreated for the third day, losing 1.3 percent.
Israel’s TA-25 Index dropped 0.6 percent, the most since Aug. 28. The shekel strengthened 0.1 percent against the dollar. Israel’s army said it shot down the Syrian jet after it penetrated Israeli air space over the Golan Heights.