U.S. Index Futures Advance as Yen Slips; Crude Rises Above $31


U.S. Index Futures Advance as Yen Slips; Crude Rises Above $31

©2016 Bloomberg News
Sarah McDonald and Yuko Takeo

(Bloomberg) — U.S. index futures signaled gains after Friday’s tumble, while crude climbed above $31 a barrel. Japan’s stocks rose as the yen gave back some of its steepest weekly jump since 2009, with most other Asian markets closed Monday for lunar New Year holidays.

Standard & Poor’s 500 Index contracts added 0.4 percent. The underlying gauge sank 3.1 percent last week as concern about everything from China to oil and interest rates led strategists to lower their year-end projections for the benchmark gauge. West Texas Intermediate rose 0.9 percent, after last week’s 8.1 percent drop, as data showed speculators are making unprecedented wagers on crude and they’re split on the direction for prices. The yen weakened, buoying the Topix index in Tokyo. Gold fell.

U.S. stocks are down 8 percent since Dec. 31, wiping out more than $2 trillion in value in the S&P 500’s worst start to a year since 2008. Fresh signs of sluggishness in the American economy sparked a selloff in technology and consumer shares with the highest valuations on Friday, adding to the concerns about crude’s 50 percent slump since June and China’s economic slowdown that have dominated global markets this year.

“With China markets closed for the new year holidays, we’re lacking factors to move on,” Masaaki Yamaguchi, a Tokyo-based equity market strategist at Nomura Holdings Inc. said by phone. “Opinions are divided on how to assess the U.S. jobs data.”

Markets closed today include those in China, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea and Taiwan. The U.S. jobless rate was 4.9 percent in January, an eight-year low, even as the creation of 151,000 jobs trailed the 190,000 forecast by economists in a Bloomberg survey.

North Korea’s launch of a long-range rocket prompted the U.S. and South Korea to announce talks on the possible deployment of a missile defense system, a move bound to rile China, as the United Nations Security Council vowed to quickly adopt a resolution with significant new sanctions.

Stocks

The Topix index climbed 0.8 percent at the 3 p.m. Tokyo close. Japanese shares slumped last week to hand back all of the gains they posted after the Bank of Japan’s Jan. 29 stimulus boost. Australia’s S&P/ASX 200 Index was little changed Monday.

March e-mini futures on the S&P 500 rose 0.4 percent to 1,882.25, while contracts on the Nasdaq 100 Index added 0.5 percent. Losses of more than 6 percent in companies from Netflix Inc. to Amazon.com Inc. fueled the technology share gauge’s tumble on Friday.

Currencies

The yen was down 0.4 percent at 117.39 per dollar after climbing 3.7 percent last week in its strongest performance since July 2009. The euro declined 0.2 percent to $1.1137 after recording its steepest five-day advance since March.

The Bloomberg Dollar Spot Index added less than 0.1 percent to 1,229.23 after rising 0.6 percent on Friday, its biggest advance this year. Futures pricing for a Federal Reserve move before year-end climbed to 53 percent Friday after the jobs report, from 46 percent the previous day.

DoubleLine Capital’s Jeffrey Gundlach sees the dollar weakening this year, joining investors challenging a fragile consensus that the greenback is headed higher. Gundlach, who oversees the $54.7 billion DoubleLine Total Return Bond Fund, bought currencies other than the dollar in his diversified funds for the first time in five years last month, he said at an event in Beverly Hills, California, on Friday.

China, shut all this week for holidays, reported Sunday its foreign-exchange reserves shrank $99.5 billion in January to $3.23 trillion, the smallest level since 2012.

Bonds

Treasuries declined, driving up the yield on the benchmark 10-year note by 2 basis points to 1.86 percent.

Japan’s benchmark 10-year yield rose 2 basis points after reaching an unprecedented low at 0.02 percent on Feb. 5. Similar-dated Australian sovereign securities also declined, spurring a 4 basis point climb in yields to 2.59 percent.

Commodities

Crude futures added 0.9 percent to $31.17 a barrel in New York. Oil is down 16 percent this year amid brimming U.S. crude stockpiles and concerns about Iran’s effort to boost exports after the removal of sanctions. Speculators’ short positions on crude were near a record while longs were at the highest since June, lifting total wagers to unprecedented levels, data from the U.S. Commodity Futures Trading Commission show.

Saudi Arabian Oil Minister Ali al-Naimi said he held “successful” talks with his Venezuelan counterpart about ways of cooperating to stabilize the crude market, without saying what steps producers should take to shore up prices.

“There are very little signs of abatement on the supply side,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “West Texas is likely to trade between $30 and $34. We could get a push outside of this, but I suspect that’s going to be a central range for months to come.”

Gold slid 0.7 percent to $1,165.11 per ounce, halting six days of gains and retreating from the highest level since October.

–With assistance from Chikako Mogi and Yuji Nakamura.

To contact the reporters on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net; Yuko Takeo in Tokyo at ytakeo2@bloomberg.net To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond

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