A trader works on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg
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Nov. 26 (Bloomberg) -- Kelvin Tay, chief investment strategist for UBS Wealth Management in Singapore, talks about the outlook for Asian equities. He speaks with Susan Li on Bloomberg Television's "Global Connection." (Source: Bloomberg)
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Nov. 26 (Bloomberg) -- David Mann, senior strategist at Standard Chartered, talks about the outlook for the dollar and the euro. Mann speaks with Erik Schatzker and Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
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Nov. 26 (Bloomberg) -- Brendan Brown, chief economist at Mitsubishi UFJ Securities International Plc, talks about the European sovereign debt crisis and the outlook for bond yields. He speaks with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)
European Central Bank council member Erkki Liikanen said in a speech today that policy makers may keep support measures in place for longer ?if required.? Photographer: Henrik Kettunen/Bloomberg
Stocks dropped, extending a third straight weekly decline for the MSCI World Index, as tensions in Korea mounted and concern deepened that Europe?s debt crisis will worsen. The cost of insuring against defaults by Portugal, Spain and Ireland rose to records and the dollar strengthened.
The MSCI World slipped 1 percent at 11:30 a.m. in New York and the Standard & Poor?s 500 Index lost 0.7 percent. South Korea?s Kospi Index fell 1.3 percent and Hungary?s BUX Index slid 2.8 percent. The dollar rose 1 percent to $1.3231 per euro, a two-month high, as it strengthened against all 16 major peers. The S&P GSCI commodities index slipped 0.3 percent.
Almost $2 trillion has been erased from global stocks in the past three weeks amid concern Ireland?s debt crisis will spread to other European Union countries. S&P cut ratings on Irish banks today, reducing Anglo Irish Bank Corp.?s counterparty credit rating to junk. North Korea threatened a ?shower of terrifying fire? as the USS Washington traveled to participate in drills with South Korea.
?On top of the tension in Korea, the European situation is one that?s going to continue to affect the markets in a negative way,? said Walter ?Bucky? Hellwig, a Birmingham, Alabama-based senior vice president at BB&T Wealth Management, which oversees $17 billion. ?Over here, retail traffic is very good and that?s fueling some optimism. However, with so many unknowns, I?d see a choppy market.?
?Black Friday?
The S&P 500 erased almost half of its 1.5 percent rally on Nov. 24. U.S. markets were closed yesterday for the Thanksgiving holiday and will end trading at 1 p.m. today. The S&P 500 is down 0.8 percent this week and 2.8 percent from a two-year high on Nov. 5, while the MSCI World has slumped 1.9 percent.
Alcoa Inc., Johnson & Johnson and Bank of America Corp. slumped at least 1.4 percent to lead declines in 29 of 30 stocks in the Dow Jones Industrial Average.
Retailers and shoppers started Black Friday, the biggest shopping day of the year and a bellwether for the holiday season. Analysts? estimates for holiday sales vary from little changed to increases of as much as 4.5 percent. The National Retail Federation has forecast November-December holiday sales will rise by 2.3 percent from a year ago, the most since 2006.
The Stoxx Europe 600 Index slumped 0.5 percent as almost two companies fell for every one that gained. Banks and insurance companies led the retreat.
Irish Bank Ratings
S&P lowered Anglo Irish Bank?s rating six levels to B, or junk, from BBB, citing concern about sovereign support for the lender. The bank remains on CreditWatch with ?negative implications,? S&P said.
S&P also lowered the long-term counterparty credit rating on Allied Irish Banks Plc, Bank of Ireland Plc, and Irish Life & Permanent Plc by one level, and cut ratings on the senior and subordinated debt of the banks. Moody?s Investors Service placed the ratings of Irish lenders, including Anglo Irish, under review yesterday before a probable ?multi-notch? downgrade of the sovereign.
Spanish banks led declines that sent the IBEX 35 index down 2 percent. Banco Santander SA, Spain?s biggest lender, dropped 3.6 percent, while Bankinter SA sank 2.9 percent. BNP Paribas SA, France?s largest lender, slipped 2.7 percent. Rio Tinto Group lost 1.8 percent.
Hungarian stocks sank for a second day, with the benchmark BUX Index losing the most among equity benchmarks worldwide, after the government said citizens must move their privately managed pension assets to the state or lose 70 percent of their pension claim. Economy Minister Gyorgy Matolcsy announced the policy on Nov. 24 as the most indebted eastern member of the EU steps up efforts to reduce the budget deficit.
Asian Stocks
The MSCI Asia Pacific Index fell 1.3 percent to its lowest level in a month. Hana Financial Group Inc., South Korea?s fourth-largest financial company, slumped 4.1 percent. China?s Shanghai Composite Index dropped 0.9 percent after Shanghai Securities News reported the government may cut its target for new lending next year. Industrial & Commercial Bank of China Ltd. lost 1.8 percent.
The yield on the Spanish 10-year bond was little changed at 5.17 percent after jumping as much as 11 basis points earlier. Credit-default swaps on Spain climbed 21 basis points to 320.5, while contracts on Portugal soared 31.5 basis points to 507.5 and those on Ireland increased 19 basis points to 599.5.
Treasuries, Commodities
The yield on the U.S. 10-year Treasury note dropped four basis points to 2.87 percent. The Dollar Index, which tracks the currency against those of six trading partners, jumped 0.9 percent to 80.426, set for its third consecutive weekly gain, the longest advance since May. The euro depreciated 0.4 percent to 111.23 yen as it weakened against 11 of 16 major peers.
Copper for March delivery slipped 0.5 percent to $3.7460 a pound in New York, declining for the third time in four days. Aluminum, nickel and zinc also retreated in London. Gold fell 1.4 percent to $1,356.02 an ounce and silver slid 2.9 percent to $26.79 an ounce. Oil slipped 0.2 percent to $83.69 a barrel in New York.
Commodities also dropped on speculation that China, the biggest consumer of everything from aluminum to zinc, will increase borrowing costs and after the country?s exchanges increased margins to curb speculation.
China has pledged to contain consumer costs after inflation sped up to its fastest since 2008 and food prices jumped 10.1 percent in October. The government may cut the target for new lending next year, Shanghai Securities News reported. The country?s futures exchanges, where the world?s top four agricultural contracts are traded, raised margins to discourage speculators.
To contact the reporters on this story: Justin Carrigan in London at jcarrigan@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net.
To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net.
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