Tags: Gold Rises With Bonds Amid Tension in Ukraine Stocks Decline

Gold Rises With Bonds Amid Tension in Ukraine; Stocks Decline

Friday, 02 May 2014 02:59 PM

May 2 (Bloomberg) -- Gold rallied with Treasuries, while U.S. stocks declined after an earlier rally, as escalating tension in Ukraine overshadowed data showing payrolls rose the most in two years.

The Standard & Poor’s 500 Index dropped 0.3 percent at 2:10 p.m. in New York after the gauge briefly topped its closing record. Thirty-year bond yields fell to a 10-month low and gold rose 1.3 percent, headed for its best gain in almost a month. The Bloomberg Dollar Spot Index erased earlier advances to trade little changed against most major peers.

The United Nations Security Council held an emergency meeting on Ukraine today after the country sent armored vehicles and artillery to retake Slovyansk, defying a demand by Russian President Vladimir Putin to pull back troops. U.S. nonfarm payrolls rose last month by the most in two years and the jobless rate fell to 6.3 percent, a sign that economic growth is poised to accelerate as the Federal Reserve pares monthly bond- buying and considers when to raise interest rates.

“The end result is neutral but it’s the positive of the jobs numbers being offset by greater concerns about what’s going on in the Ukraine,” said John Manley, chief equity strategist at Wells Fargo Funds Management in New York, which advises $231 billion in the Wells Fargo Advantage Funds. “There’s more activity over there and that has the market a little bit worried. It’s something we will have to deal with for a while because I don’t see it going away right away.”

30-Year Yields

Thirty-year bond yields fell five basis points to 3.36 percent, according to Bloomberg Bond Trader prices. The rate touched the lowest since June. Ten-year yields fell three basis points to 2.58, the lowest in two months, after earlier rising eight basis points.

The S&P GSCI index of 24 commodities rose 0.4 percent as metals rallied. Silver surged 2.8 percent and gold jumped 1.5 percent as the Ukraine tensions increased haven demand. Copper narrowed its decline this week as available supplies of the metal reached the lowest level since 2008.

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, slipped 0.1 percent after earlier rising as much as 0.4 percent, the most since March 19, as investors grew confident the world’s largest economy was emerging from a first-quarter slowdown.

The dollar traded at 102.35 yen after touching 103.02, the strongest since April 8. It was little changed at $1.3879 per euro after weakening to $1.3889 yesterday, the least since April 11.

Record High

The S&P 500 has risen 1 percent this week as companies from Merck & Co. to Sprint Corp. topped estimates. The index today jumped as high as 0.4 percent to surpass its closing record of 1,890.90, and the Dow Jones Industrial Average fluctuated near a record.

“On a Friday, people are going to be more inclined to be less long going into a weekend with potential military action happening in the Ukraine,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “People don’t want to walk in Monday morning and be negatively surprised by a down market because of military action in Europe, so they’re selling off.”

U.S. employers added 288,000 workers, the biggest gain since January 2012 and followed a revised 203,000 increase the prior month that was stronger than initially estimated, Labor Department figures showed. The median forecast in a Bloomberg survey of economists called for a 218,000 advance.

Considerable Time

The Fed said it will keep the benchmark interest rate close to zero for a “considerable time” after its bond-buying program ends. It reduced monthly debt purchases to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely.

“It’s a pretty strong report that suggests the Fed will continue to taper,” Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego, said in a phone interview. The firm oversees $350 billion. “This is the first strong confirmation we’re unwinding some of the winter weakness. I think it keeps the Fed rate hike in 2015 very much on track.”

The drop in the unemployment rate from March’s 6.7 percent came as the agency’s survey of households showed the labor force shrank by more the 800,000 in April. The so-called participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, matching the lowest level since 1978, from 63.2 percent a month earlier.

“While the headline certainly suggests conditions are improving, you also need to focus on the labor force participation rate,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., which oversees $290 billion, said in a phone interview. “It’s a little disappointing as people continue to drop out of the labor force.”

--With assistance from Emma O’Brien in Wellington, Cecile Vannucci, Claudia Carpenter, Paul Dobson, Anchalee Worrachate and Stephen Kirkland in London, Sarah McDonald in Sydney, Lu Wang and Daniel Kruger in New York, Jonathan Burgos in Singapore and Eric Lam in Toronto.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net; Joseph Ciolli in New York at jciolli@bloomberg.net To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net Jeremy Herron, Stephen Kirkland

© Copyright 2017 Bloomberg News. All rights reserved.

 
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Gold Rises With Bonds Amid Tension in Ukraine; Stocks Decline
Gold Rises With Bonds Amid Tension in Ukraine Stocks Decline
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2014-59-02
Friday, 02 May 2014 02:59 PM
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