BLBG:Stocks Rise as Commodities Gain After China GDP Report; Euro Strengthens
Stocks (MXAP) rose and copper climbed to the highest in almost four months as China’s economic slowdown fueled speculation monetary policy will ease. The euro snapped a two-day decline as Spain’s borrowing costs fell at an auction and German investor confidence jumped the most on record.
The MSCI All-Country World Index (MXWD) added 0.8 percent at 6:45 a.m. in New York, with the Shanghai Composite Index climbing 4.2 percent. Standard & Poor’s 500 Index futures advanced 0.6 percent. Copper rallied as much as 3.3 percent. The euro appreciated 0.9 percent to $1.2783 and Spain’s two-year note yield fell nine basis points. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade rated companies sank 3.25 basis points to the lowest since Oct. 31.
Gross domestic product in China, the world’s second-largest economy, grew 8.9 percent in the fourth quarter, the slowest pace in more than two years, the statistics bureau said in Beijing. German confidence improved 32.2 points to minus 21.6, the ZEW Center for European Economic Research in Mannheim reported. Spain sold 4.88 billion euros ($6.2 billion) of bills, compared with the maximum 5 billion euros targeted, its first offering since S&P cut its credit rating by two steps last week.
“There’s a bias in China right now for more policy easing,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “We are hearing China’s senior leadership is very, very concerned about the outlook in Europe.”
European Stocks
The Stoxx Europe 600 Index rose 0.8 percent to its highest level since Aug. 2, led by banks, carmakers, mining and oil companies. Six stocks advanced for every one that retreated.
Afren Plc climbed 13 percent, the biggest gain in the index, after saying that it has discovered oil and gas off the coast of Nigeria. Rio Tinto Group advanced 2.8 percent after the world’s third-largest mining company said its fourth-quarter iron-ore production rose to a record.
The gain in U.S. futures indicated the S&P 500 will advance as trading resumes following the Martin Luther King holiday yesterday. A report today may show that a measure of manufacturing in the New York region climbed to 11 in January from 9.5 in December, according to the median forecast of 50 economists surveyed by Bloomberg News.
Wells Fargo & Co. and Citigroup Inc. are among companies scheduled to report earnings today. S&P 500 companies, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September-December period, according to analysts’ estimates compiled by Bloomberg.
Spanish, EFSF Auctions
The yield on Spanish 10-year bonds dropped eight basis points to 5.10 percent. The government sold 12-month debt at an average yield of 2.049 percent, compared with 4.05 percent at an auction on Dec. 13. It sold 18-month paper at 2.399 percent, down from 4.226 percent last month.
The yield on the European Financial Stability Facility bond due 2016 rose eight basis points to 2.14 percent. EFSF sold 1.501 billion euros of 182-day bills at an average yield of 0.2664 percent, the Bundesbank said. The euro area’s bailout fund lost its top credit rating at S&P yesterday.
Italian bonds rose for a second day, sending the 10-year yield down 12 basis points to 6.51 percent. German bunds weakened, with the 10-year yield rising four basis points to 1.81 percent. U.S. 10-year Treasury yields climbed three basis points to 1.89 percent.
Greek two-year notes are worth about 23 percent of face value. Greece is insolvent and will default on its debts, Fitch Ratings Managing Director Edward Parker said.
The euro jumped 0.9 percent to 98.15 yen, snapping a two- day decline. The dollar depreciated against 15 of its 16 major counterparts, losing 1 percent versus South Africa’s rand. Dollar Index (DXY) declined 0.8 percent.
Oil Climbs
Copper futures in New York climbed to $3.7565 a pound, the highest price since Sept. 21. The S&P GSCI gauge of 24 commodities gained 1.8 percent, the most since Jan. 3. West Texas Intermediate oil rose 2.2 percent to $100.89 a barrel. Natural gas fell as much as 5.1 percent from its Jan. 13 close to $2.533 per million British thermal units, the lowest since September 2009.
The MSCI Emerging Markets Index rose 2.2 percent, the most in two weeks on a closing basis. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong surged 4.5 percent. While China’s economy expanded at the slowest pace in 10 quarters, growth beat the 8.7 percent estimate by economists in a Bloomberg survey. Benchmark gauges in Russia, India, Poland and Turkey climbed more than 1.3 percent.
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
