BLBG:Stocks Rise as Commodities Gain; Euro Little Changed Before Crisis Meeting
Stocks (MXWD) rallied and commodities rose for a third day on speculation that China may act to spur growth. U.S. index futures gained as Alcoa (AA) Inc.’s revenue beat analysts’ estimates, and the euro gained before leaders meet.
The MSCI All-Country World Index (MXWD) added 0.8 percent at 6:55 a.m. in New York and Standard & Poor’s 500 Index futures increased 0.9 percent. Alcoa climbed 2.4 percent in pre-market trading. The Shanghai Composite Index (SHCOMP) jumped 2.7 percent for its biggest three-day advance in 15 months. The euro strengthened 0.3 percent to $1.2769. The yield on the 10-year German bund gained three basis points. The S&P GSCI (SPGSCI) gauge of 24 commodities climbed 0.9 percent.
China’s import growth fell to a two-year low in December, government trade data showed today, underscoring an economic slowdown. International Monetary Fund Managing Director Christine Lagarde and German Chancellor Angela Merkel are scheduled to discuss Greece at a meeting today. Laszlo Birinyi, whose prediction the bull market would weather a five-month retreat came true in October, says U.S. stocks (MXWD) will keep climbing in 2012.
“Policy makers in Beijing are very much focused on downside risks,” said Andrew Pease, a Sydney-based senior investment strategist for the Asia-Pacific region at Russell Investment Group, which oversees $137.6 billion of assets. “It would be a reasonable expectation that there’s a lot of monetary easing to come in the first half of the year.”
The Stoxx Europe 600 Index advanced 1.5 percent as Bayerische Motoren Werke AG led automakers higher. Debenhams Plc, the U.K.’s second-largest department-store chain, rallied 9.6 percent after reporting holiday sales that beat analyst estimates. Larger rival Marks & Spencer Group Plc climbed 3.1 percent as revenue increased.
Profit Drops
Royal Philips Electronics NV (PHIA) sank 6.1 percent, the most since September. The world’s biggest maker of light bulbs said fourth-quarter profit dropped by about 45 percent, held back by sluggish demand for health-care equipment in Europe. Software AG, Germany’s second-largest software maker, plunged 20 percent for the biggest drop in almost a decade after earnings and sales missed analysts’ estimates.
The gain in S&P 500 futures indicated the U.S. equities gauge will rise for a second day. Alcoa, the biggest U.S. aluminum producer, posted a fourth-quarter loss excluding restructuring costs of 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg. Sales rose 6 percent to $5.99 billion, topping the $5.7 billion estimate in a Bloomberg survey.
Improving Sentiment
“The sentiment in the markets improved as the earnings season kicked off,” said Anita Paluch, a senior sales trader at Gekko Global Markets Ltd. in London. That’s “shifting the attention from the European troubles for a while.”
U.S. equities will advance at least 8 percent as improving corporate profits force bears to capitulate, according to Birinyi, who manages $400 million in Westport, Connecticut.
The MSCI Emerging Markets Index (MXEF) advanced 1.4 percent. The Shanghai Composite Index climbed 6.4 percent in three days. Benchmark gauges in India, Russia, Poland, Turkey, South Korea and Taiwan climbed at least 1.2 percent.
Oil in New York jumped 1.4 percent to $102.70 a barrel, the first increase in four days, and copper advanced 1.7 percent. Imports of the metal by China, the world’s biggest buyer of copper, surged to a record. Aluminum climbed as much as 1.2 percent to $2,134 a ton, the highest since Dec. 7.
Dollar Weakens
The euro appreciated 0.3 percent versus the yen. The dollar weakened against higher-yielding currencies including the New Zealand and Australian dollars. The dollar depreciated 0.7 percent against the so-called Aussie, and weakened 0.9 percent versus New Zealand’s currency.
The yield on the 10-year U.S. Treasury note increased two basis points to 1.98 percent. The government sells $32 billion of three-year notes, the first of three bond auctions this week totaling $66 billion.
The yield on the Dutch 10-year bond rose three basis points to 2.26 percent. The Netherlands sold 3.105 billion euros of 0.75 percent debt due April 2015 at an average yield of 0.853 percent in an auction today.
Austrian (GAGB10YR) 10-year yields declined seven basis points as the government issued 1.32 billion euros of securities maturing in September 2016 and April 2022, with the average yield on the 2022 debt at 3.322 percent, down from 3.528 percent in July.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
