BLBG: Commodities Hit Two-Year High on Fed, Earnings; U.S. Futures Climb
Stocks and commodities climbed, driving global indexes to two-year highs, after the Federal Reserve expanded bond purchases and earnings beat analysts’ estimates. The dollar and 30-year government bonds declined.
The MSCI World Index gained 1.2 percent at 10:10 a.m. in London, reaching the highest level since Sept. 26, 2008. Futures on the Standard & Poor’s 500 Index rose 0.5 percent. The Dollar Index fell as much as 0.8 percent to 11-month low. Five-year Treasuries rose while 30-year bonds declined, driving the difference in yields to a record. Irish 10-year notes tumbled for an eighth day, the longest run of declines since January 2009. The S&P GSCI index of 24 commodities climbed 1.4 percent.
The Fed’s $600 billion bond-buying program reinforced optimism the world economy won’t deteriorate and corporate profits will improve. The European Central Bank and Bank of England meet to discuss monetary policy today. BNP Paribas SA, the world’s biggest bank by assets, reported a 46 percent jump in third-quarter profit, while Unilever, the second-biggest consumer-products maker, said net income rose 19 percent.
“Financial markets have a fresh liquidity injection to fuel risk appetite,” said Graham Bishop, an equity strategist at Royal Bank of Scotland Group Plc in London. “There is now a real chance of a rally into year-end. The micro newsflow has again showed strength through the results season.”
The Stoxx Europe 600 Index surged 1.3 percent to its highest level since April 26. BNP Paribas jumped 4.3 percent and Unilever rallied 5.1 percent. Swiss Reinsurance Co. jumped 6.3 percent as it agreed to repay the capital injected last year by Warren Buffett. HeidelbergCement AG soared 7.2 percent as profit beat estimates.
BHP, Potash Corp.
BHP Billiton Ltd. rose 5.4 percent to a record in London after Canada blocked its $40 billion hostile takeover for Potash Corp. of Saskatchewan Inc. Rolls-Royce Group Plc lost 3.1 percent after one of its engines exploded in mid-flight, forcing Qantas Airways Ltd. to ground its Airbus SAS A380 fleet. Airbus owner European Aeronautic Defence & Space Co. fell 4.2 percent.
The MSCI Emerging Markets Index advanced 1.1 percent, heading for the highest closing level since June 2008. India’s Bombay Stock Exchange Sensitive Index surged 2.1 percent, poised for a record close. Coal India Ltd. jumped 40 percent in its trading debut after selling $3.4 billion of shares last month in the nation’s largest initial public offering. The Shanghai Composite Index jumped 1.9 percent, while indexes in Thailand, South Africa, Turkey, Egypt, Poland and Hungary increased more than 1 percent.
Treasuries
The yield on the five-year Treasury note dropped to a record low after the Fed said yesterday it will focus its asset purchases on medium-maturity debt. The 30-year bond yield rose two basis points to 4.07 percent on speculation the bond- purchasing plan will stoke inflation. The German 30-year bond dropped for the first time in six days, sending the yield 10 basis points higher to 2.94 percent.
The GSCI index of 24 commodities climbed to the highest level since Oct. 3, 2008. Silver futures jumped to $25.20 an ounce on the Comex in New York, a 20-year high for a most-active contract. Crude oil advanced as much as 1.6 percent to $86.05 a barrel. White, or refined, sugar climbed 2.5 percent to the most since at least January 1989.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Paul Sillitoe in London at psillitoe@bloomberg.net
