BLBG: Oil, Stocks, Pound Highest Since November on Outlook for Growth
Crude oil, stocks and the pound advanced to six-month highs on optimism government spending plans will drag the world economy out of the recession.
Oil rose for a third day in New York, extending its gain to $63.17 a barrel as of 11:37 a.m. in London. The MSCI World Index of 23 developed countries rose for a fourth day, climbing 0.3 percent, and Europe’s Dow Jones Stoxx 600 Index advanced 0.5 percent. The pound strengthened against all of the 16 most- traded currencies, surpassing $1.60 for the first time since Nov. 6.
The U.S. recession will probably end in the third quarter, according to a survey by the National Association for Business Economics. A separate report yesterday showed consumer confidence in America jumped the most in six years. Japan’s export slump slowed in April, buoyed by China’s $586 billion stimulus plan.
“The U.S. confidence numbers appear to have changed the mood of the market,” said Paul Robinson, a currency strategist at Barclays Capital in London. “We moved back to an optimistic view of the world.”
Soybeans rose 0.8 percent to $11.955 a bushel in Chicago, the highest since September. Copper advanced 1.4 percent to $4,725 a metric ton in London, a two-week high. Nickel gained 3.7 percent to $13,900 a ton, the most in almost six months.
The Reuters/Jefferies CRB Index of 19 raw materials has rebounded 23 percent since the start of March on optimism the global recession is easing. The gauge slumped 36 percent last year, the worst performance in a half-century.
Pound Gains
The world’s biggest financial companies have reported $1.47 trillion in writedowns and credit losses since the start of 2007, stemming from the collapse of the subprime-mortgage market. The U.S. economy, the world’s largest, will contract 2.8 percent this year, according to a Bloomberg survey of 61 economists.
The pound gained against the dollar, euro and yen as investors bet declines left the currency cheap given the outlook for a global economic rebound. Almost a quarter of the 220 fund managers surveyed by Merrill Lynch & Co. in May said the U.K. currency was undervalued. The pound has risen about 2.9 percent since it broke through its 200-day moving average versus the dollar on May 20 and is up 7 percent this month.
Treasuries rose, driving yields on 10-year notes down from a six-month high, as the Federal Reserve prepared to buy government debt for a second day. The government is also scheduled to sell $35 billion of five-year securities today. The difference in yield, or spread, between two- and 10-year notes narrowed to 259 basis points today from 263 yesterday, the most since October 2003.
Bank of Japan
The U.S. Fed, the Bank of England and Bank of Japan have lowered rates close to zero and are already buying bonds, effectively printing money to reflate their economies in a policy known as quantitative easing.
Commodity producers were among the biggest gainers in Europe’s Stoxx 600 as Anglo American Plc climbed with copper and Seadrill Ltd., the Norwegian oil-rig company controlled by billionaire John Fredriksen, posted earnings that beat analysts’ estimates. London-based Anglo American added 2.2 percent, while Hamilton, Bermuda-based Seadrill gained 9.6 percent.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent, after the gauge rallied 2.6 percent yesterday on the consumer confidence report.
“Surveys are rather encouraging, but we still are in a slowdown, or rather a contraction, even if the drop slows and a hope for stabilization exists,” European Central Bank council member Christian Noyer said in Paris today.
Emerging Markets
The MSCI Emerging Markets Index of stocks in 23 developing nations added 2 percent to 754.69, the most in a week. The Micex Index in Russia, the world’s biggest energy exporter, added 2.3 percent and India’s Sensitive Index climbed 3.8 percent.
Bradford & Bingley Plc, the U.K. mortgage lender taken over by the government, yesterday said it won’t make interest payments due in June or July on 325 million pounds ($520 million) of subordinated bonds.
“The leading indicators are hinting at some form of stabilization,” said Andrea Cicione, a credit strategist at BNP Paribas SA in London. “Things are still falling but they’re not falling off a cliff.”
The London interbank offered rate, or Libor, for three- month loans in dollars rose for a second day, increasing one basis point to 0.67 percent, according to the British Bankers’ Association. It rose for the first time in 39 days yesterday.
