European stocks and U.S. equity-index futures slipped after global equities capped their biggest weekly advance since July 2013. Crude declined, while the dollar gained versus European currencies after tumbling on Friday.
The Stoxx Europe 600 Index fell 0.6 percent by 8:21 a.m. in London, after nearing a record on Friday, while Standard & Poor’s 500 Index futures retreated 0.2 percent. The MSCI Asia Pacific Index extended a six-month high as China’s Shanghai Composite Index capped its longest streak of gains since 2007. The dollar strengthened at least 0.3 percent against the euro, pound and Norwegian krone. U.S. oil fell 2 percent as Saudi Arabia said it was pumping near record amounts of crude.
The value of global equities rose to a record $68.4 trillion on March 20 as investors bet shares will benefit from delayed Federal Reserve interest-rate increases and record central-bank stimulus in Europe and Japan. Three Fed members speak Monday after policy makers lowered their rate outlook, sending the dollar to its worst week since 2011. Greek Prime Minister Alexis Tsipras is set to meet German Chancellor Angela Merkel on Monday as he seeks to salvage a bailout deal.
“The overriding factor for the Fed is whether they can afford to overstimulate the economy or raise rates too soon,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “They can’t be too aggressive in raising rates as the underlying U.S. economy isn’t as strong. Equities will continue to trend higher but as valuations become stretched, markets will be more vulnerable to a pullback.”
Stock Moves
The MSCI All-Country World Index capped a 3.2 percent gain last week, its steepest advance since July 2013. The measure is up 7 percent over the past year as policy makers from Europe to Japan expand stimulus programs to stave off deflation and preserve growth. Their actions have helped temper the impact of the Fed’s unwinding of its own quantitative-easing program.
Both the Nasdaq Composite Index and the Stoxx 600 came within 0.5 percent of record highs last week. Fed officials said in their statement that they’ll be waiting for confidence in the recovery before boosting borrowing costs.
Seventeen of the 19 industry groups on the Stoxx 600 retreated today. The gauge rose to as high as 404.51 on Friday, close to the March 2000 all-time closing high of 405.5.
Christian Dior SE fell 3.2 percent and LVMH Moet Hennessy Vuitton SE tumbled 3 percent after JPMorgan Chase & Co. analysts cut the luxury-goods companies’ shares to neutral.
The Shanghai Composite Index advanced 2 percent from its highest close since 2008. The gauge is heading for a ninth straight gain even after China’s securities regulator urged investors to consider risks from the nation’s surging stock market.
Hang Seng
Hong Kong’s Hang Seng Index climbed 0.5 percent Monday and the Hang Seng China Enterprises Index was 0.2 percent higher, extending its winning run to eight days. Japan’s Topix rose 0.7 percent to the highest since November 2007.
The Nasdaq Composite advanced for a fifth straight day Friday, gaining 0.7 percent to 5,026.42. The rally put the technology-heavy index within seven points of wiping out all its losses since the Internet bubble and came in the same week as Apple Inc., the Nasdaq Composite’s biggest member, entered the the Dow Jones Industrial Average.
In currency markets, the euro was 0.4 percent weaker at $1.0776 after surging 1.5 percent Friday to cap its biggest weekly advance since 2011. The pound was 0.6 percent weaker and the krone slipped 0.6 percent to 8.0676 per dollar.
The Bloomberg dollar index added 0.2 percent after losing 1.3 percent Friday to cap a slump of 2.2 percent for the week, the biggest since October 2011. The gauge of the U.S. currency against 10 major peers was at a decade high as recently as March 13.
Bonds Hold
Yields on 10-year Treasury notes were little changed Monday after tumbling 18 basis points last week to 1.93 percent. The rate on similar German bunds was little changed at 0.17 percent after dropping to a record 0.168 percent on Friday.
Fed Vice Chairman Stanley Fischer speaks at the Economic Club of New York on Monday, while San Francisco Fed President John Williams will deliver a speech via videoconference to the Australian Business Economists. Cleveland Fed President Loretta Mester speaks on a panel discussion in Paris with Bank of France Governor Christian Noyer.
Oil Slide
European leaders, including Merkel, French President Francois Hollande and European Central Bank President Mario Draghi pressed Tsipras to make good on a February accord and “present a full list of specific reforms” in the coming days before any further aid can be disbursed.
West Texas Intermediate crude dropped to $45.61 a barrel after its first weekly increase in five weeks. Oil has been on the brink of both bull and bear markets this year as a declining rig count in the U.S. is countered by data showing the nation’s stockpiles are at a record high. Brent was down 1.6 percent at $54.43 a barrel.
Saudi Arabia’s Oil Minister Ali al-Naimi said at the weekend that the world’s biggest crude-exporting nation is pumping about 10 million barrels of oil a day, close to a record amount produced in 2013. Mohammed al-Madi, the Saudi governor to OPEC, said oil prices won’t return to $100 a barrel because higher prices would draw more shale and output from higher-cost producers to the market.
Extract: http://www.bloomberg.com/news/articles/2015-03-22/u-s-futures-climb-after-global-stock-surge-dollar-slips
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