BLBG:Stocks Rebound From Four-Day Decline as Treasuries Retreat; Dollar Weakens
Stocks rebounded from a four-day decline that left valuations near the cheapest levels since March 2009. Treasuries, German bunds and gold fell, while the dollar snapped six straight gains.
The MSCI All-Country World Index rose 1.3 percent at 10:15 a.m. in London. Standard & Poor’s 500 Index futures jumped 1 percent. The 10-year Treasury note yield added six basis points to 2.05 percent, and Germany’s yield climbed eight basis points to 1.92 percent. The dollar weakened as much as 1.1 percent against the euro after legal challenges to Germany’s role in the euro rescue funds were rejected by the nation’s top court. Gold slid 1.7 percent and copper advanced above $9,000 a metric ton.
Equities rallied after a selloff erased $2.5 trillion from global market values this month and left the MSCI World trading at 12 times reported earnings. Australia’s economy expanded more than estimated in the second quarter, the government said today. The Federal Reserve will release its Beige Book survey of U.S. economic conditions today, while President Barack Obama will address Congress tomorrow on his plan to boost job growth.
“Valuations are attractive in the short term,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “Some stocks have been massacred so there are good entry points. Still, volatility remains significant and it’s best to be cautious.”
The Stoxx Europe 600 Index advanced 2.1 percent from the lowest level in more than two years. The gauge’s valuation had dropped to about 10.4 times reported earnings, near the cheapest since December 2008, according to data compiled by Bloomberg. Cie. Financiere Richemont SA jumped 4.8 percent as the second- biggest luxury-goods company reported sales that beat estimates.
Yahoo!
S&P 500 futures indicated the U.S. stocks gauge will gain after a three-day, 4.4 percent slump. Yahoo! Inc. surged 7 percent in Germany after ousting Chief Executive Officer Carol Bartz and announcing a strategic review of its business.
Obama plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments. The President will address Congress tomorrow amid unemployment that remains at 9.1 percent more than two years after the recession’s official end.
The main components of Obama’s jobs plan, though not its scale, have been largely telegraphed by the administration. For weeks, people familiar with deliberations have said the White House is considering tax incentives, infrastructure and assistance to local governments. Obama has stressed construction and tax cuts in recent public speeches.
Treasuries
Chicago Fed President Charles Evans is scheduled to speak in London today, while Chairman Ben S. Bernanke will talk about the U.S. economic outlook tomorrow in Minneapolis. Treasury 10- year notes fell for the first time in a week, sending yields up to 2.05 percent.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.6 percent, dropping for the first time in seven days. The Swedish krona strengthened 1 percent against the euro after the central bank signaled it may raise interest rates one more time this year.
The Australian dollar appreciated against all but two major peers monitored by Bloomberg, climbing 1.3 percent versus the greenback, after a report showed the economy grew last quarter at the fastest pace in four years. The Swiss franc was little changed at 1.2064 per euro, a day after the central bank set a ceiling of 1.20 versus the 17-nation currency and said it was prepared to use “unlimited” quantities of cash to defend it.
Greece, Spain
Greek 10-year bonds declined, pushing the yield up 17 basis points. The extra yield investors demand to hold the securities instead of benchmark bunds increased to a euro-era record 1,807 basis points, or 18.07 percentage points. The yield on the 10- year Spanish bond fell 11 basis points, declining for the second straight day, with the similar-maturity Italian security’s yield sliding 15 basis points.
The cost of insuring government and bank bonds fell from records. The Markit iTraxx SovX Western Europe Index of credit- default swaps linked to 15 nations dropped 10 basis points to 320 and Markit’s financial gauge was 11 lower at 262 basis points.
Copper jumped 0.9 percent, the first increase in five days, to $9,104 a ton. Gold dropped for a second day to $1,843.97 an ounce. Oil rebounded 1.2 percent to $87.04 a barrel in New York.
The MSCI Emerging Markets Index rose 1.9 percent. The FTSE/JSE Africa All Share Index jumped 2.1 percent and the Micex Index surged by 2 percent in Moscow as prices for oil and industrial metals rose. The WIG20 Index gained 1.7 percent, led by KGHM Polska Miedz SA, Poland’s only copper producer.
The Shanghai Composite Index gained 1.8 percent, the most in two weeks as the China Securities Journal said the central bank may ease monetary policy. Korea’s Kospi Index (KOSPI) rallied 3.8 percent. The ISE National 100 Index (XU100) gained 1.1 percent in Istanbul as ING Groep NV said Turkish banks were more attractive than their peers in Europe, the Middle East and Africa.
To contact the reporter 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: Stuart Wallace at swallace6@bloomberg.net
