U.S. stock futures declined and oil headed toward the lowest close in a week amid speculation American lawmakers will miss a year-end budget deadline. The yen slid as Japan’s incoming pro-stimulus prime minister said he may change rules governing the central bank.
Futures for Standard & Poor’s 500 Index dropped 0.5 percent as of 8:17 a.m. in London. The Stoxx Europe 600 Index slipped less than 0.1 percent even as BP Plc climbed after winning judicial approval on claims settlement for the 2010 Gulf of Mexico oil spill. Markets in most European nations are closed today for Christmas eve. The yen fell 0.2 percent against the dollar, extending the longest streak of weekly declines in nine months. Brent oil in London dropped 0.3 percent to $108.62 a barrel. Spot gold climbed 0.4 percent.
The yen weakened against the dollar. Photographer: Kiyoshi Ota/Bloomberg
The Japanese national flag flies atop the Bank of Japan headquarters in Tokyo, Japan. Photographer: Akio Kon/Bloomberg
“Most people had made the assumption that the fiscal-cliff discussions would have been successful,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. U.S. House Speaker John “Boehner’s failure to get enough votes for the ‘Plan B’ in the House certainly was a shock to the financial markets. If that story continues, it will continue to hit risk markets and support demand for the U.S. dollar.”
Volume on Australia’s stock market, which shut at 2:10 p.m. local time, was more than 60 percent below the 30-day average for the time of day. Hong Kong traded for half a day, while Japan was closed.
Gold Producers
The MSCI Asia Pacific excluding Japan Index gained 0.1 percent with about eight shares rising for every seven that fell. Hong Kong’s Hang Seng Index gained 0.2 percent and Australia’s S&P/ASX 200 Index closed 0.3 percent higher. South Korea’s Kospi Index was up 0.1 percent, while the Shanghai Composite Index advanced 0.3 percent.Supplies of cash in China are the most plentiful in three years in the run-up to public holidays, after policy makers told the central bank to ensure companies have enough funds to support economic growth, according to the seven-day repurchase rate from the National Interbank Funding Center.
Gold producers advanced in Asia as the U.S. budget impasse boosted demand for the metal as an investment haven. Alacer Gold Corp. (AQG) surged 6.7 percent in Sydney and Newcrest Mining Ltd. climbed 1 percent. Zijin Mining Group Co. (2899), China’s No. 1 gold producer by market value, rose 2.4 percent in Hong Kong.
Budget Stalemate
The S&P 500 Index had its worst decline in more than a month on Dec. 21 after Boehner failed to garner support from his caucus for “Plan B,” which would have extended tax cuts on incomes below $1 million.“For the first time I feel it’s more likely that we will go off the cliff,” Lieberman, a retiring Connecticut independent, said on CNN’s “State of the Union” program of the so-called fiscal cliff. Lawmakers plan to return to Washington Dec. 27 to continue negotiating.
The yen dropped against 15 of 16 major peers and was down to 84.37 per dollar. The currency fell for a sixth week against the greenback last week after the nation’s central bank said it would review its inflation target after a pro-stimulus government was elected.
Abe, who is poised to become prime minister after his Liberal Democratic Party’s coalition secured a majority in elections on Dec. 16, has called on the BOJ to pursue “unlimited easing” to help end deflation and revive growth.
Japan’s currency has tumbled 12 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
Gold’s Reversal
Gold advanced after its worst week in six months, erasing an earlier decline. Bullion for immediate delivery rose to $1,663.42 an ounce after dropping as much as 0.3 percent today.“The market’s wondering which way it’s going to go,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “As 2012 draws to a close and 2013 comes into play, the price may drift back up as it looks like it’s not going to happen,” he said, referring to an agreement by U.S. lawmakers on the budget.
Copper climbed for a second day after U.S. data showed demand from the second-largest user may improve, gaining 0.2 percent in London. Reports from the U.S. Commerce Department last week showed household purchases climbed last month as orders for long-lasting items increased more than forecast.
Source: Bloomberg
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