European Index Futures Gain as Asia Falls; Nickel Rallies
European equity futures rose while Asian stocks fell, pushing the regional index to an almost two-week low, as investors weighed company earnings, while the Korean won gained. Wheat climbed with nickel amid prospects for additional sanctions against Russia over the Ukraine crisis.
Futures on the Euro Stoxx 50 Index increased 0.2 percent by 7:18 a.m. in London as Astrazeneca Plc said it was reviewing a previous bid from Pfizer Inc. The MSCI Asia Pacific Index lost 0.4 percent, and Japan’s Topix index slid toward a fourth straight monthly loss. Standard & Poor’s 500 Index futures fluctuated. The won strengthened 0.6 percent. Wheat futures advanced a fifth day, rising 0.6 percent, while nickel pared its advance in London.
The U.S. and European Union will impose new sanctions on Russia as soon as today amid the detention of international observers by pro-Russian separatists. Russia is one of the world’s biggest nickel producers and is the fifth-largest wheat exporter, followed by Ukraine. The Bank of Japan and U.S. Federal Reserve meet on monetary policy this week while markets await reports on American employment and Chinese manufacturing.
“The Ukraine tensions are once again mounting,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients today. “The word coming from Capitol Hill and also Europe is that sanctions on Russian officials will be harder, more direct and onerous on President Putin’s inner circle; this will disrupt normal trading conditions.”
The new round of sanctions will be focused on people close to President Vladimir Putin “who have a significant impact on the Russian economy,” Deputy White House National Security Adviser Tony Blinken said in a TV interview yesterday. Representatives from the 28 EU nations will meet today to widen a list of people subject to asset freezes and travel bans, an official from the bloc who didn’t want to be identified said at the weekend.
Inspectors Detained
Russia has stoked tensions in Ukraine by threatening military maneuvers and by taking “no concrete steps” to implement an April 17 accord meant to diffuse the crisis, the Group of Seven nations — the U.S., Japan, Canada, the U.K., France, Germany and Italy — said in an April 25 statement. Separatists released one of the 11 Organization for Security and Cooperation in Europe inspectors they had been holding, the Russian state-run newswire RIA Novosti reported yesterday.
The ruble was little changed at 36.0625 versus the dollar and at 49.8577 per euro. Moscow’s Micex Index, down 15 percent this year through April 25, fell 0.6 percent. Morgan Stanley cut its ratings on the country’s equities to equalweight and said in a report dated April 25 that there’s a high probability valuations may keep falling as further sanctions are threatened.
Pfizer Bid
In Europe, the Stoxx 600 erased its gain for the month on April 25. AstraZeneca may move after people familiar with the matter said Pfizer Inc., the biggest U.S. drugmaker, plans to renew discussions to acquire the London-based pharmaceutical company. Pfizer confirmed it made an earlier bid.
Japan’s Topix dropped 0.8 percent while the Nikkei 225 Stock Average lost 1 percent, headed for its lowest close since April 15. The gauge was dragged lower as Honda Motor Co. plunged 4.5 percent after the company forecast net income of 595 billion yen ($5.82 billion) for the year ending March 31, 2015, below the 693 billion yen estimated by analysts.
Tencent, Sands
Denso Corp., a supplier of automotive electrical equipment, slid 3.1 percent after its profit forecast for this fiscal year fell short of estimates. The Nikkei 225 is the worst-performing developed-market equity benchmark this year, followed by the Hang Seng Index.
The Hang Seng index slid 0.3 percent in Hong Kong, as Tencent Holdings Ltd., China’s biggest internet company slid 3.2 percent, following U.S. technology companies lower.
Sands China Ltd. paced declines in casino operators, falling by more than 3 percent for the second straight day, after the Nikkei newspaper reported that a bill to allow casinos in Japan may not be passed by parliament during this session.
A gauge of Chinese companies listed in Hong Kong swung between gains and losses after data showed industrial-company profit growth showing in the first quarter from a year ago. China Construction Bank Corp. climbed 0.4 percent after the nation’s second-largest lender by market value reported earnings that beat estimated on wider lending margins.
IPOs, Earnings
The Shanghai Composite Index slumped to a five-week low after the nation’s biggest life insurer reported a drop in profit and concern grew that new share sales will divert funds. China Life Insurance Co. (601628)’s mainland A shares tumbled the most in six weeks after first-quarter profit slid 28 percent.
The Kospi (KOSPI) index in Seoul fluctuated as the won climbed to 1,035.25 per dollar.
Wheat for July delivery climbed to $7.12 a bushel and touched the highest intraday price since April 16, while contracts on corn and soybeans added at least 0.5 percent.
Nickel Threat
Nickel for three-month delivery on the London Metal Exchange advanced to $18,599 a metric ton, near a 14-month high. Moscow-based OAO GMK Norilsk Nickel is the world’s largest nickel refiner and Russia is the world’s second-biggest producer of the metal after China, according to an April 17 report from Barclays Plc.
The seizure of the international inspectors by pro-Russian separatists last week added pressure to a confrontation made urgent by Russian military exercises on Ukraine’s frontiers. The North Atlantic Treaty Organization says 40,000 Russian troops are near the border.
Ukraine’s southern air-defense forces are in “operational readiness,” the country’s defense ministry said yesterday on its website.
Gold traded near the highest level in more than a week, set for a monthly gain, as the crisis intensifies. Bullion for immediate delivery rose as much as 0.3 percent to $1,306.59 an ounce, the highest since April 16. Platinum rose a fourth day, climbing 0.4 percent to $1,428.88 an ounce, as silver fluctuated.
West Texas Intermediate crude oil advanced 0.4 percent to $101.02 a barrel, after sinking 2.7 percent last week in the worst decline since mid-March. Brent crude futures added 0.2 percent to $109.79 per barrel. Russia is the world’s largest energy exporter.
(By Nick Gentle)
Source: bloomberg
