(Bloomberg) — U.S. stocks fell from records as oil dropped
below $50 a barrel, while the dollar strengthened against
emerging-market currencies. European equities advanced with
bonds from Italy to Portugal as investors reacted to the
extension of Greece’s bailout.
The Standard & Poor’s 500 Index slid 0.2 percent at 9:31
a.m. in New York after closing at an all-time high on Friday.
The Stoxx Europe 600 Index added 0.6 percent, while Portugal’s
10-year rate reached 2.118 percent, below its U.S. equivalent.
The dollar strengthened before Federal Reserve Chair Janet
Yellen addresses Congress this week. The ruble slid 3.6 percent
in offshore trading after Moody’s Investors Service downgraded
Russia to junk. Oil lost 2.7 percent in New York.
The government in Athens has until the end of Monday to
complete a list of policies in return for the continued funding
after talks concluded late on Feb. 20. Moody’s joined S&P in
ranking Russia’s debt as non-investment grade, citing the
conflict in Ukraine and plunging oil prices. Sales of existing
U.S. homes probably slipped in January, economists said before a
National Association of Realtors report.
“We have indexes at all-time highs, the Nasdaq is close to
breaking 5,000, and we’re in an environment where central bank
liquidity is plentiful across the globe,” said Andreas Nigg,
head of equity and commodity strategy at Vontobel Asset
Management in Zurich. “It’s difficult to call an end to the
bull market. News about a deal on Greece is decent.”
U.S. stocks posted their longest streak of weekly gains
since the beginning of December as Greece reached a deal to
extend its bailout program and investors speculated the Fed will
keep rates lower for longer.
The Nasdaq Composite Index ended last week on an eight-day
winning streak that took the gauge to 4,955.97, less than 2
percent away from a record. The S&P 500 climbed 0.6 percent last
week and the Dow rose to its first record of the year.
Investors are waiting for economic data to gauge the
strength of the economy. Sales of previously owned U.S. homes
probably fell 1.8 percent in January, economists projected
before a National Association of Realtors report at 10 a.m. in
Washington. They will get further clues this week as Yellen
testifies before Congress.
They’re also watching the situation in Greece after its
Feb. 20 agreement with creditors. The Greek reform measures are
still subject to validation by the International Monetary Fund,
the European Central Bank and the European Commission, the
institutions collectively known as the troika which Prime
Minister Alexis Tsipras vowed not to recognize.
“Markets have reacted positively in terms of risk
sentiment and we’re seeing the periphery doing very well”
because of the Greek deal, said Owen Callan, a fixed-income
strategist at Cantor Fitzgerald LP in Dublin. “It takes away
the big short-term event risk, even if a medium-term risk is
Spanish bonds advanced with their counterparts among
Europe’s higher-yielding government bonds, pushing the 10-year
yield 10 basis points lower to 1.40 percent.
The Stoxx 600 advanced for a fifth day to extend the
highest level since 2007. The U.K.’s FTSE 100 Index surpassed a
record close in intraday trading before slipping 0.3 percent as
lower-than-projected profit at HSBC Holdings Plc pushed the
Greece’s ASE Index slipped 4.5 percent last week. The
market was closed on Monday for a holiday. Spain’s IBEX 35 Index
climbed 0.8 percent for one of the biggest rallies among 18
Greek government bonds rose for a fourth day, with the
three-year note yield dropping 180 basis points, or 1.80
percentage point, to 14.819 percent, the lowest since Jan. 28.
“Greece will still be an issue for the market for some
time,” said Kevin Lilley, who helps manage 15 billion pounds
($23 billion) as head of European equities at Old Mutual Global
Investors U.K. in London. “If we can get the agreement made in
the next couple of days, which is necessary for this extension,
then hopefully the market can pop that to one side for a few
months and focus on the underlying economy, which is steadily
The Swiss franc weakened with core government bonds on
reduced demand for haven assets, depreciating 0.4 percent to
1.07273 per euro. The dollar strengthened 0.5 percent to $1.1321
per euro and the Bloomberg Dollar Spot Index advanced 0.2
Russia’s $3 billion of 4.875 percent bonds due September
2023 fell for a third day, sending the yield 30 basis points
higher to 6.70 percent. Credit-default swaps on government debt
rose, signaling a 30 percent chance of default within five
years, according to data compiled by Bloomberg. Local markets
are closed in Russia for a holiday.
Moody’s cut Russia’s rating one step to Ba1, the highest
non-investment level and in line with countries including
Hungary and Portugal. Downgrades to junk from at least two
rating companies may force money managers whose guidelines
prohibit them from holding debt rated below investment grade to
sell as much as $5.8 billion of Russian dollar and local bonds,
according to a January report from JPMorgan Chase & Co.
Pro-Russia rebels attacked Ukrainian positions with
artillery, mortars and automatic weapons, the Defense Ministry
in Kiev said, as a bomb killed two people at a pro-Ukraine rally
in the eastern city of Kharkiv.
Ukraine’s hryvnia weakened 4.9 percent and the government’s
$2.6 billion of 9.25 percent bonds maturing in July 2017 fell
for a seventh day, dropping 2.48 cents to 41.58 cents on the
Turkey’s lira slid 1.1 percent against the dollar amid
speculation the central bank will cut interest rates on Tuesday.
The Hang Seng China Enterprises Index of mainland companies
listed in Hong Kong dropped 0.2 percent as trading resumed
following Lunar New Year holidays.
West Texas Intermediate crude oil for April delivery slid
to $49.30 a barrel. Brent was down 2.1 percent at $58.94 in
Oil fell as fields in eastern Libya resumed pumping to
Hariga port after a pipeline was repaired, according to state-run National Oil Corp. Oman, the biggest Middle Eastern oil
producer that’s not a member of OPEC, is boosting crude output
to as much as possible with the global price rout over, said
Salim Al Aufi, undersecretary of the oil and gas ministry.
To contact the editors responsible for this story:
Jeff Sutherland at
Jeremy Herron, Stephen Kirkland