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Stocks, Grains, Peso, Oil Drop on Swine Flu; Bonds, Yen Gain


Wal-Mart.com USA, LLCWALL STREETBy Jeff Kearns and Daniel Hauck

April 27 (Bloomberg) — U.S. stocks declined, extending a global drop, while the yen, dollar and Treasuries gained as the swine flu outbreak spread. Mexico’s peso fell the most since November, oil tumbled 5.5 percent and grain prices retreated.

The Standard & Poor’s 500 Index slipped 0.6 percent, with commodity producers and consumer companies dropping the most and gains in drugmakers limiting the decline. Delta Air Lines Inc. tumbled 18 percent and Carnival Corp., the largest cruise operator, lost more than 12 percent. The Dow Jones Stoxx 600 Index of European shares retreated 0.5 percent. The yen climbed more than 1 percent against the euro and the peso slid more than 3 percent against the dollar.

The spread of swine flu from Mexico to as far as New Zealand prompted concern of a pandemic, snuffing out a rebound in stocks that has pushed the MSCI World Index up 27 percent since March 9. Equities also fell and Treasuries rose after Lawrence Summers, director of the White House National Economic Council, said the U.S. economy will continue to contract “for some time to come,” in an interview on “Fox News Sunday.”

“The market is down because of a panic-driven, knee-jerk reaction to some cases of the flu,” said Michael Williams, who helps oversee about $2 billion as CEO and managing director at Genesis Asset Management LLC in New York. “The fundamentals were already sick - having people get the flu isn’t going to change that. It’s a temporary event.”

Travel Companies Hit

Carnival Corp., the biggest cruise-line operator, slumped 10 percent to $25.60. Las Vegas Sands Corp., the casino operator, fell 5.3 percent to $7.03. Marriott International Inc., the biggest U.S. hotel chain, declined 6.3 percent to $20.90. UAL Corp., operator of United Airlines, dropped 17 percent to $5.35.

Smithfield Foods Inc., the world’s largest pork processor, tumbled 15 percent to $8.80. Springdale, Arkansas-based Tyson Foods Inc., the largest U.S.-based meat producer, retreated 6.3 percent to $10.24.

Nanjing-based China Yurun Food Group Ltd., the country’s biggest hog processor, sank 10 percent to HK$9.

Yields on 10-year Treasury notes dropped five basis points to 2.95 percent. The yen strengthened to 126.94 per euro from 128.66 last week. The dollar advanced to $1.3151 per euro, from $1.3242.

The cost of protecting European corporate bonds increased for the first time in four days, with the Markit iTraxx Crossover Index of bonds with ratings below investment grade rising 17 basis points to 852, according to JPMorgan Chase & Co. prices at 9:15 a.m. in London. The Australian dollar fell 1.2 percent to 71.47 U.S. cents, and the New Zealand dollar dropped 1.2 percent to 56.59 cents.

Global Slump

The MSCI World Index slipped for the first time in five days, losing 1 percent. The gauge of 23 developed countries has gained 5 percent since U.S. earnings season started as more than 67 percent of S&P 500 companies that reported first-quarter results beat estimates.

Analysts predict that U.S. profits will decline through September, dropping 34 percent in the first quarter and 33 percent in the second. Worldwide losses tied to bad loans and mortgages may reach $4.1 trillion by the end of 2010, the Washington-based International Monetary Fund said last week.

Paris-based Air France KLM-Group fell 7.4 percent to 8.32 euros in Paris trading. Four people in France suspected of suffering from swine flu have tested negative for the virus, an official at the Health Ministry said today. London-based British Airways Plc tumbled 8.6 percent to 149.8 pence.

Credit-default swaps on Air France climbed 22 basis points to 439, while those on British Airways jumped 40 to 737, according to CMA Datavision prices in London.

Beijing-based Air China Ltd., the country’s largest international carrier, slumped 13 percent to HK$3.49 in Hong Kong. Singapore Airlines Ltd., the world’s second-biggest carrier by market value, slipped 4.5 percent to S$10.12.

Drugmakers Gain

Basel, Switzerland-based Roche Holding AG, which said it has an ample supply of the Tamiflu treatment that can reduce swine flu symptoms, gained 3.9 percent to 145 Swiss francs. Chugai Pharmaceutical Co., the Tokyo-based unit of Roche, surged 14 percent to 1,845 yen.

NasVax Ltd. added 15 percent to 0.92 shekel in Tel Aviv trading. The Nes Ziona, Israel-based company develops vaccines for preventing several types of flu as well as alternative methods of administration such as a nasal spray. The shares surged as much as 150 percent before NasVax said in a statement to the Tel Aviv Stock Exchange that it has no plans at this stage to develop a vaccine for swine flu.

Mexico’s toll of flu-related deaths exceeded 100 and Spain reported its first case of swine influenza, prompting concern of a pandemic. Six people in Canada contracted swine flu and more cases are likely, government officials said. New Zealand said as many as 13 students who visited Mexico may have the disease.

‘Demand a Discount’

Australia, Japan, Singapore and South Korea are screening travelers for fever, while Hong Kong raised its swine-flu response level to “serious” from “alert.” Barack Obama’s administration declared a public health emergency after 20 people contracted the disease.

“As if we didn’t have enough to contend with,” Sydney- based Greg Gibbs and London-based Andy Chaytor, strategists at Royal Bank of Scotland Group Plc, wrote in a report today. “It’s just what we need now, a flu pandemic in the midst of the biggest financial crisis since the Great Depression.”

Mexican stocks were downgraded by UBS AG to “underweight” from “top pick” on concern the country’s economy will worsen.

“Investors should demand a discount for Mexican stocks due to the poor outlook for economic growth, which may be exacerbated by aggressive albeit sensible moves by the government to curb the recent outbreak of a lethal swine flu virus,” Zurich-based UBS said in a note today.

Crops Drop

Corn for July delivery fell as much as 4.1 percent to $3.70 a bushel in electronic trading on the Chicago Board of Trade. Soybeans for July dropped as much as 5.7 percent to $9.7525 a bushel.

Industrial metals slid on speculation that the outbreak may curb efforts to revive the global economy. Copper for delivery in three months lost as much as 4.1 percent to $4,285 a metric tons on the London Metal Exchange. Nickel and zinc also declined. Crude oil for June delivery fell as much as 5.7 percent to $48.62 a barrel, on speculation swine flu will limit airline travel.

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This entry was posted on Monday, April 27th, 2009, 9:46 am and is filed under Stock Market. You can follow any responses to this entry through RSS 2.0. You can leave a response, or trackback from your own site.

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