Australia’s dollar tumbled against all of its major peers, while the nation’s shares and bonds rallied after an unexpected interest-rate cut. European equities declined after earnings from BMW AG and UBS Group AG missed estimates, while the yen rose to an 18-month high.
The Aussie reversed an earlier gain versus the greenback after Reserve Bank of Australia reduced its benchmark rate by a quarter of a percentage point to a record low. The yen strengthened beyond 106 a dollar for the first time since October 2014, helping push the Bloomberg Dollar Spot Index to its lowest in almost a year. The Stoxx Europe 600 Index and a gauge of Asian stocks slipped to three-week lows as Chinese manufacturing data added to evidence of a lackluster global economy. Gold advanced to a 15-month high and oil climbed to more than $45 a barrel in New York.
While monetary easing in the Asia-Pacific region and Europe helped global equities and commodities recover from multi-year lows since February, global economic data remain subdued. Manufacturing in the U.S. expanded in April by less than economists forecast and China’s has stabilized at best, reports showed this week. Corporate earnings are also doing little to lift sentiment, with analysts predicting an 8 percent decline in profits for companies in the S&P 500 Index.
“We’re into the May doldrums where people are starting to reconsider portfolios and will probably not do too much,” said Sean Darby, chief global equity strategist in Hong Kong at Jefferies Group LLC. “They’ve either missed the rally from the first quarter or they’re getting a little bit too concerned about some of the weakness in the global data.”
A gauge of U.K. manufacturing is due to be released on Tuesday along with figures for Swiss industrial output.
The Australian dollar slid 0.8 percent to 76.05 U.S. cents as of 8:27 a.m. London time. Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent, as predicted by 12 of 27 economists in a Bloomberg survey. The RBA needs a weaker currency to kick-start a revival in industries outside mining, where an investment boom is halfway through unwinding.
“They’re saying that there’s no point in messing around, let’s get in and do this, cut the cash rate and get some of the speculative money out of the Australian dollar,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne.
The yen climbed a fourth day, strengthening as much as 0.7 percent to 105.70 per dollar. The currency has jumped about 5 percent in the four trading days since the Bank of Japan unexpectedly refrained from adding to record stimulus.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell for a fourth day. Hedge funds and other large speculators extended bets on dollar weakness versus eight major currencies to the most in almost two years, according to a Commodity Futures Trading Commission report for the week ended April 26.
The Stoxx Europe 600 Index dropped 0.5 percent. BMW fell 3 percent after the German carmaker’s profit declined, while UBS lost 4.3 percent. HSBC Holdings Plc gained 2.7 percent after its earnings decreased by less than analysts estimated.
A gauge of Asian equities that excludes Japan, where markets are shut until Friday, declined for a fifth day. Benchmarks retreated in Hong Kong, Singapore and Taipei, while gains were seen in Seoul and Shanghai. Australia’s S&P/ASX 200 Index jumped 2.1 percent, the most since February.
Australia & New Zealand Banking Group Ltd. swung to a 5.6 percent advance, after initially tumbling as much as 4 percent following the release of its results. DBS Group Holdings Ltd., Southeast Asia’s largest bank, climbed for the first time in eight days after announcing a bigger profit than analysts forecast.
Futures on the Nikkei 225 Stock Average slid 0.5 percent in Singapore. Profits at Japanese exporters may suffer to the tune of 1.14 trillion yen ($10.7 billion) this year due to currency movements alone, Nikkei reported, citing its own estimates. Bank of Japan Governor Haruhiko Kuroda said Monday in Frankfurt that the yen’s appreciation risks harming the nation’s economic recovery. S&P 500 Index futures lost 0.2 percent.
West Texas Intermediate crude rose 1.2 percent to $45.31 a barrel, after sliding 2.5 percent in the last session. It closed above $46 on Thursday for the first time since November. U.S. oil inventories are projected to have risen by 500,000 barrels last week, according to a Bloomberg survey of analysts before an Energy Information Administration report Wednesday.
Gold rose as much as 0.7 percent to $1,300.50 an ounce, buoyed by the dollar’s retreat. Copper for three-month delivery slipped 1.1 percent in London, while lead declined 1.2 percent.
Iron-ore futures tumbled as much as 6.9 percent in Singapore on rising stockpiles in China, the biggest buyer. Port inventories in the nation rose 1.2 percent to 98.5 million tons last week, the highest in more than a year, according to Shanghai Steelhome Information Technology Co.
Australia’s bonds rallied after the RBA’s rate decision, pushing the 10-year yield to a three-week low of 2.47 percent. Similar-maturity U.S. Treasuries yielded 1.84 percent, down three basis points on the day.
Greenland Holding Group Co.’s dollar bonds fell to the lowest in more than seven weeks after S&P Global Ratings cut its rating on the Chinese property developer to junk last week. S&P downgraded its assessment to BB, two steps below investment grade, from BBB-, saying that the group’s “leverage has weakened materially,” according to an April 29 statement.