Stocks and U.S. equity-index futures jumped, while commodities rallied for a third day on speculation the Federal Reserve will take steps to bolster the economy and after a gauge showed China’s manufacturing may have contracted at a slower pace. Treasuries and the dollar declined.
The MSCI All-Country World Index added 1.1 percent at 10:35 a.m. in London, halting a three-day retreat. Standard & Poor’s 500 Index futures advanced 1.6 percent. S&P’s GSCI Index of 24 raw materials rose 0.9 percent, with oil climbing 1.5 percent, copper gaining 1.6 percent and gold little changed after earlier reaching a record high. Treasury 30-year yields increased seven basis points. The dollar fell against 15 of its 16 major peers.
The MSCI gauge of global equities is rebounding from the lowest level since September before central bankers meet this week in Jackson Hole, Wyoming. Last year, Fed Chairman Ben S. Bernanke’s hint of a second round of asset purchases spurred a 28 percent jump in the S&P 500. Preliminary data showed an index of Chinese output climbed to 49.8 in August from 49.3 in July. European services and manufacturing growth held steady in August, London-based Markit Economics said, before a U.S. report that may show home sales fell.
“All the focus is going to be on Friday’s presentation and what, if anything, Ben Bernanke is going to” do to shore up U.S. growth, said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “It’s dangerous to presume we’re going to hear anything definitive. All in, things are going to remain fairly volatile,” he said in a Bloomberg Television interview.
UBS, G4S
The Stoxx Europe 600 Index rose for a second day, climbing 2 percent as all 19 industry groups advanced. UBS AG gained 2.9 percent after Switzerland’s biggest bank said it plans to cut 3,500 jobs to trim costs. G4S Plc, the world’s largest publicly traded provider of security services, rallied 6 percent as earnings increased.
The Stoxx 600 has still lost 17 percent this year, driving valuations down to 9.5 times estimated profits, near the lowest level since March 2009, according to data compiled by Bloomberg.
The gain in S&P 500 futures indicated the gauge will rise for a second day. The index closed less than 0.1 percent higher yesterday, paring a rally of as much as 2 percent.
New home sales in the U.S. probably fell 0.6 percent in July from the previous month, when sales slid 1 percent, according to the median forecast of economists surveyed by Bloomberg. A separate survey showed the Richmond Fed’s index of manufacturing probably declined for a second month.
Treasuries
Treasury 30-year yields climbed to 3.49 percent, pushing the yield difference to two-year notes to 328 basis points, the most in nearly a week. Ten-year yields rose five basis points to 2.16 percent. The Treasury will sell $35 billion of two-year notes today, another $35 billion of five-year securities tomorrow and $29 billion of seven-year debt on Aug. 25.
The Dollar Index, which tracks the greenback against currencies including the euro, yen and pound, fell 0.6 percent to 73.61, the lowest in nearly a week.
The Australian dollar gained 0.9 percent to $1.0497, reversing a drop of as much as 0.2 percent. China accounts for 25 percent of exports from Australia. New Zealand’s currency strengthened 0.9 percent to 83.16 U.S. cents.
The euro traded 0.7 percent higher at $1.4494, maintaining gains after a report showed German investor confidence fell more than economists forecast.
Oil in New York gained to $85.72 a barrel. Libyan rebels hunted for Muammar Qaddafi and declared his regime over as loyalist forces kept up their fight in parts of Tripoli, the capital now mostly in rebel hands. Goldman Sachs Group Inc. said Libya’s oil production will recover more quickly than forecast. S&P’s GSCI Index of 24 raw materials climbed 0.8 percent.
The MSCI Emerging Markets Index rallied 1.8 percent, after falling to a one-year low yesterday. China’s Shanghai Composite Index advanced 1.5 percent, Taiwan’s Taiex climbed 3.3 percent and South Korea’s Kospi jumped 3.9 percent. OTP Bank Nyrt., Hungary’s biggest bank, led a 2.4 percent gain in Hungary’s BUX index as the forint strengthened 1.1 percent against the Swiss franc.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Mark Gilbert at magilbert@bloomberg.net
