Oil fell, helping reverse a slide in global stocks, as crude demand weakened after Japan’s worst earthquake on record forced refineries to close. The yen gained as investors bought the domestic currency as a haven.
Oil slumped 1.5 percent to $101.16 a barrel at 3:09 p.m. in New York and earlier fell 3.6 percent for its biggest drop since November. The MSCI World Index erased a loss of as much as 0.5 percent and the Standard & Poor’s 500 Index gained 0.9 percent to 1,306.49 as higher-than-estimated profit forecasts from Steel Dynamics Inc. and Pall Corp. lifted commodity and industrial shares. Japan’s Nikkei 225 Stock Average slid 1.7 percent. The yen rose 1.3 percent versus the dollar, the most since August.
The Bank of Japan pledged to ensure financial stability after as hundreds of people were killed in the 8.9-magnitude quake that triggered a tsunami that engulfed towns on the northern coast. Losses in oil and the rebound in stocks also came as protesters in Saudi Arabia stayed away from a so-called Day of Rage as police were deployed in force to deter activists.
“Investors continue to grapple with the bigger issue of the price of oil and how the movement of revolutions across the Middle East and northern Africa will unfold,” said David Goerz, the San Francisco-based chief investment officer at Highmark Capital Management Inc., which oversees $17 billion. “It’s a volatile period, but we’re buying on the dips and continue to stay long in equities, the economic expansion looks resilient and sustainable.”
Brent crude for April settlement fell 1.1 percent to $114.12 a barrel in London, capping its first weekly loss in seven. The earthquake and aftershocks set a 220,000 barrel-a-day Cosmo Oil Co. refinery on fire near Tokyo. JX Nippon Oil & Energy Corp. closed refineries in Sendai, Kashima and Negishi. JX Nippon’s three plants that shut have a combined processing capacity of about 600,000 barrels a day.
President Barack Obama said he’s prepared to tap the nation’s strategic oil reserve if necessary to deal with any disruptions in the energy supply and said the Justice Department will be on the watch for any evidence of price gouging.
“In an economy that relies on oil, gas prices affect everybody,” Obama said at a White House news conference. Obama refused to say what level prices would have to hit for the U.S. to tap the Strategic Petroleum Reserve.
The S&P 500 rebounded after slumping 1.9 percent yesterday to its lowest level since January. Today’s advance trimmed the gauge’s weekly loss to 1.3 percent. The benchmark index for U.S. stocks has fallen almost 3 percent from a 32-month high last week amid concern surging energy costs will stifle growth. It’s still up 93 percent from its bear-market low two years ago amid improving corporate profits and government stimulus efforts.
Valero, Steel Dynamics Jump
Valero Energy Corp. surged 5.9 percent after the largest U.S. oil refiner agreed to buy Chevron Corp.’s U.K. refinery and 1,000 retail stores. Steel Dynamics climbed 3.7 percent after forecasting more profit than analysts estimated. Pall drove industrial stocks higher after boosting its earnings forecast. National Semiconductor Corp. rose 3.7 percent after the chipmaker reported earnings that beat analysts’ projections.
The iShares MSCI Japan Index Fund, a U.S. exchange-traded fund that tracks the Japanese market, slid 1.7 percent to $10.81, its lowest price of the year.
“The market is digesting the earthquake in Japan, which is a human tragedy but probably won’t have a big financial impact,” said Uri Landesman, who helps oversee about $900 million as managing general partner of New York-based hedge fund Platinum Partners LLP. “The global economy is recovering on balance, but it’s very fragile as we see this week and the market is more event-driven right now.”
S&P 500 futures briefly erased losses before exchanges opened in New York after Commerce Department data showed retail sales excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, increased 0.6 percent for a second month in January. That topped the median economist forecast for a 0.5 percent increase, according to a Bloomberg survey. Total sales increased 1 percent, matching estimates.
U.S. stocks fell to their lows of the session after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 68.2 in March from 77.5 in February. The gauge was projected to decline to 76.3, according to the median estimate of 68 economists in a Bloomberg News survey. Estimates ranged from 74 to 80. The index averaged 89 in the five years leading up the recession that began in December 2007 and ended in June 2009.
Five stocks dropped for every one that gained in the Stoxx Europe 600 Index, as all 19 industry groups declined. Munich Re and Swiss Reinsurance Co., the world’s biggest reinsurers, lost more than 3.5 percent. K+S AG, Europe’s largest potash manufacturer, dropped 4.7 percent.
The Bloomberg Europe 500 Insurance Index tumbled 2.4 percent for its biggest loss since June.
The cost of insuring insurance company bonds rose, with credit-default swaps protecting the senior debt of Swiss Re climbing 9.7 basis points to 125.2 according to CMA. Contracts on Munich Re increased 8.4 basis points to 76.4.
The Nikkei 225 fell to the lowest since January and the MSCI Asia Pacific Index lost 0.8 percent. The yen appreciated against 15 of 16 of its most-traded counterparts, climbing 0.8 percent versus the euro. The Markit iTraxx Japan index of default swaps tied to the nation’s government and corporate bonds rose 5.2 basis points to 102.15, according to Markit Group Ltd.
“The Japan earthquakes added another uncertainty to markets that were already plagued with turmoil in the Middle East and European debt concerns,” said Kang Shin Woo, chief investment officer at Seoul-based Korea Investment Management Co., which manages $17 billion. “This could raise concern for the Japanese economy that has showed some signs of recovery.”
Portugal’s 10-year benchmark bond dropped for the fifth day, with the yield 10 basis points higher at 7.60 percent. The extra yield, or spread, investors demand to hold the debt instead of bunds rose 14 basis points to 439 basis points, while the Greek 10-year spread over German debt widened 9.5 basis points to 960 basis points.
The yield on the 30-year U.S. Treasury bond rose four basis points to 4.54 percent. The yield slid by the most this year yesterday as demand at a $13 billion auction of the securities rose to the highest level since 2000.
Copper for delivery in May reversed earlier losses, gaining 0.6 percent to $4.2225 a pound in New York. Aluminum, lead and zinc declined in London. Gold for immediate delivery rose 0.6 percent to $1,420.50 an ounce.
The MSCI Emerging Markets Index of stocks in developing nations dropped 0.6 percent. The Shanghai Composite Index declined 0.8 percent after People’s Bank of China Governor Zhou Xiaochuan said the government will use interest rates to control inflation, which rose at a faster-than-forecast 4.9 percent in February.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 0.8 percent after factory output grew more than analysts expected, giving the central bank scope to raise interest rates next week to quell inflation. Russia’s Micex index slid 0.7 percent.
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