BLBG: U.S. Futures Climb on Ireland; Gold, Cotton Advance
By Stephen Kirkland
Sept. 20 (Bloomberg) -- Stocks rose to a four-month high and U.S. index futures gained after Ireland said it won’t need European Union financial aid. The dollar weakened, gold rallied to a record and cotton climbed to a 15-year high.
The MSCI World Index of stocks in 24 developed nations added 0.4 percent at 10:40 a.m. in London, its highest level since May 4. Futures on the Standard & Poor’s 500 Index increased 0.5 percent. The yield on the 10-year German bund jumped 4 basis points to 2.46 percent, the Dollar Index slipped 0.3 percent, while Australia’s dollar matched the highest level in two years against the U.S. currency.
Irish Finance Minister Brian Lenihan said his country won’t require an EU bailout as it prepares to offer as much as 1.5 billion euros ($2 billion) in bonds this week. Australia’s central bank Governor Glenn Stevens signaled policy makers may need to resume raising interest rates should economic growth boost inflation. The U.S. Federal Reserve meets tomorrow to discuss its rate policy.
“The key event of the week may well be tomorrow’s Irish auctions,” Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a report. “The Fed on Tuesday will likely attract much attention, given the outside chance of more quantitative easing being announced. It seems far more likely to come in November, but the market will be carefully watching anyway.”
The Stoxx Europe 600 Index snapped four days of declines to rally 0.5 percent, while the MSCI Asia Pacific excluding Japan Index advanced 0.5 percent. The MSCI Emerging Markets Index of 21 developing countries advanced 0.3 percent.
BP, Rio Tinto
BP Plc climbed 1.3 percent after saying it permanently sealed its Macondo well in the Gulf of Mexico. Rio Tinto Group led basic-resource shares higher, gaining 1.8 percent. Brit Insurance NV rose 5 percent after Apollo Global Management teamed up with CVC Capital Partners Ltd. to make a fourth, sweetened offer for the company. SGS SA, the world’s biggest goods inspector, rose to a record after the company said it plans to reach revenue of 8 billion Swiss francs ($7.9 billion) by 2014.
The gain in U.S. futures indicated the S&P 500 may extend its third weekly rally. As the Fed’s Open Market Committee prepares to meet tomorrow, record-low interest rates are stoking the biggest increase in U.S. share buybacks ever. Corporations are using debt to pay for buybacks after the average yield on U.S. investment grade bonds fell to an all-time low of 3.70 percent last month, data from London-based Barclays Plc show.
Irish Yields
The yield on the Irish 10-year security climbed 4 basis points to 6.45 percent, leaving the difference in yield, or spread, with benchmark bunds little changed at 387 basis points. The spread and credit default swaps for Irish debt jumped to records at the end of last week on renewed concern the nation’s lenders may need more aid. Central Bank Governor Patrick Honohan said today that costs related to the country’s banking system remain “manageable.” Ireland will auction as much as 1.5 billion euros of 2014 and 2018 notes tomorrow.
The dollar weakened against 13 of its 16 most-traded counterparts, depreciating 0.4 percent to $1.3100 per euro. The yen strengthened 0.2 percent to 85.69 against the dollar, snapping a three-day decline. The so-called Aussie climbed as high as 1.1 percent to94.69 U.S. cents.
“If downside possibilities do not materialize, the task ahead is likely to be one of managing a fairly robust upswing,” Reserve Bank of Australia Governor Stevenstold a forum in the regional city of Shepparton in Victoria state today. “Part of that task will, clearly, fall to monetary policy.”
Gold for immediate delivery rose to as much as $1,283.38 an ounce and was 0.3 percent higher at $1,279.90. Cotton for December delivery climbed as high as $1.0198 a pound, the most since June 1995, on ICE Futures U.S. and was last at $1.0112. Copper for three-month delivery added 1 percent to $7,798 a metric ton on the London Metal Exchange. October oil futures, which expire tomorrow, added 6 cents to $73.72 a barrel in electronic trading on the New York Mercantile Exchange.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
