BLBG: Rise as Greece Asks for Aid Package; Greek Bonds Rally
By Justin Carrigan
April 23 (Bloomberg) -- Stocks in Europe rose and the euro snapped declines that drove it to a one-year low against the dollar after Greece said it will ask the European Union for a rescue package and German business confidence and earnings at companies including Volvo AB beat forecasts. Greek bonds rallied.
The Stoxx Europe 600 Index climbed 0.8 percent as of 7:08 a.m. in New York and futures on the Standard & Poor’s 500 Index added 0.3 percent. Russia’s Micex Index gained 1 percent after Goldman Sachs Group Inc. said stocks may advance 28 percent. The euro rose 0.1 percent versus the dollar after six days of declines. Greek 10-year bonds ended an eight-day losing streak, narrowing the yield premium to benchmark German bunds by 85 basis points.
Greece said today Finance Minister George Papaconstantinou sent a letter formally requesting the release of an EU aid package designed to help the government stave off a default. About 85 percent of companies in the S&P 500 that have reported first-quarter results beat the average analyst earnings estimate, according to data compiled by Bloomberg. Germany’s Ifo Institute said today business confidence jumped to a two-year high.
“The market was testing Greece’s resolve as the May redemption approached, and that should calm them down for a few months,” said Charles Diebel, the senior fixed-income strategist at Nomura International Plc in London. “They had to do something, because it was just getting out of control.”
Volvo Surges
Greece’s ASE Index of stocks jumped 1.7 percent while the yield premium that investors demand to hold the government’s 10- year bonds instead of German bunds narrowed below 500 basis points.
Greek bonds and stocks plunged yesterday, dragging down European markets, as Moody’s Investors Service cut its rating on Greek debt one step to A3 and the EU revised the country’s budget deficit higher. Credit-default swaps on Greek government bonds fell 54 basis points to 591 today, after rising to a record 650 basis points yesterday, according to CMA DataVision prices.
Volvo, the world’s second-largest truckmaker, surged 12 percent in Stockholm. Akzo Nobel NV, the biggest coatings company, rallied 5.2 percent in Amsterdam after saying earnings increased. Adidas AG, the world’s second-largest sporting-goods maker, gained 4.4 percent in Frankfurt after raising its profit forecast.
U.S. Futures
The gain in U.S. futures indicated the S&P 500 may extend yesterday’s 0.2 percent advance. American Express Co. rose 1.8 percent in Germany after posting higher profit. Gains were limited as Microsoft Corp. lost 2.2 percent in early New York trading after reporting sales that missed the most optimistic estimates.
Orders for long-lasting goods probably climbed in March for a fourth consecutive month, rising 0.2 percent after a 0.9 percent gain in February, economists said before a report from the Commerce Department due at 8:30 a.m. in Washington. A separate report at 10 a.m. may show new-home purchases advanced 5.5 percent to a 325,000 annual rate from the prior month, according to a Bloomberg survey.
China’s Shanghai Composite Index retreated 0.5 percent after the State Council told banks to stop loans for third-home purchases in cities with excessive property price gains. Thailand’s SET Index fell 0.9 percent after at least five grenades exploded in a Bangkok financial district near an anti- government protest. Russian, Hungarian and Czech index gains lifted the MSCI Emerging Markets Index.
Aussie Slides
The euro rose as high as $1.3346, snapping a decline that pushed it to $1.3202 earlier, the lowest level since April 30, 2009. The Australian dollar slid 0.6 percent versus the U.S. currency after central bank Governor Glenn Stevens said interest rates are “close to average,” damping speculation policy makers will raise borrowing costs.
The pound weakened 0.3 percent against the euro, erasing earlier gains, after the U.K. economy grew half as much as economists forecast in the first three months of this year. It lost 0.1 percent compared with the dollar.
Nickel for delivery in three months fell 1.5 percent to $26,680 a metric ton on the London Metal Exchange. Aluminum and zinc also declined. Crude oil for June delivery dropped 0.2 percent to $83.57 a barrel on the New York Mercantile Exchange.
To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net
