BLBG:Stocks Rise With Euro On Greek Polls; Spanish Bonds Drop
Stocks rose in Europe and Asia while the euro strengthened for the first time in five days as Greek opinion polls showed growing support for parties backing a bailout plan. Spain’s Bankia SA lost about a sixth of its market value and the country’s bonds tumbled.
The Stoxx Europe 600 Index (SXXP) advanced 0.8 percent at 10:50 a.m. in London. Standard & Poor’s 500 Index futures added 0.9 percent as U.S. equity markets were closed for Memorial Day. China’s stocks snapped a three-day slide after Credit Suisse Group AG said the government is boosting investment approvals. The euro appreciated 0.5 percent to $1.2583. The extra yield investors demand to hold Spanish 10-year bonds instead of German bunds rose to a euro-era record. Natural gas fell for a third day, copper jumped 1.3 percent and oil gained 1.1 percent.
Greece’s New Democracy placed first in all six opinion polls published on May 26 as campaigning continued for the general election on June 17. The MSCI All-Country World Index advanced last week, snapping three weekly losses that drove it to 12.9 times reported earnings, the cheapest valuation this year. More than $4 trillion was erased from global equities in the first three weeks of the month on concern Greece will abandon the euro.
“There will be no exit by Greece,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion globally. “If they take structurally positive steps, things will be all right in the long run,” he said in a Bloomberg Television interview.
Bankia Funding
Bankia (BKIA) tumbled 13 percent. The lender nationalized by Spain this month is seeking 19 billion euros ($23.8 billion) of state funds after setting aside provisions for residential mortgages and lending to companies.
Five shares gained for every one that fell in the Stoxx 600. Aveva Group Plc advanced 5.7 percent as the software- engineering company reported an increase in pretax profit. Inmarsat Plc (ISAT), the biggest provider of satellite services to the maritime industry, climbed 4.2 percent as Jefferies Group Inc. upgraded the shares. Equity markets are closed in Switzerland, Norway, Denmark, Austria, Luxembourg and Iceland for holidays today.
The yield on Spain’s 10-year bond jumped as much as 20 basis points to 6.51 percent, driving the spread over bunds to 513 basis points, or 5.13 percentage points. The Italian 10-year yield rose five basis points, with Greece’s February 2023 bond yield sliding 35 basis points.
Default Risk
The cost of insuring corporate bonds against default in Europe fell for a third day, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies declining 12 basis points to 702, the lowest since May 11.
Antonis Samaras, the leader of Greece’s New Democracy party, said in Athens over the weekend that after leaving the euro Greek incomes, bank deposits and property values would lose at least half their value within days, while food prices would rise by a quarter.
The euro rebounded from its lowest level since July 2010 against the dollar. The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.4 percent, snapping a four-day rally. The yen gained for the first time in three days against the dollar after minutes of the Bank of Japan (8301)’s April 27 meeting damped speculation the bank will boost monetary easing to achieve its 1 percent inflation goal.
Natural gas fell 3.2 percent, extending last week’s 6.5 percent last week. Temperatures east of the Rocky Mountains in the U.S. will cool off after today for the rest of the week, according to MDA EarthSat Weather in Gaithersburg, Maryland. Oil in New York jumped for a third day to $91.82 a barrel.
China Investments
The MSCI Emerging Markets Index (MXEF) added 0.7 percent, trimming this month’s decline to 11 percent. The Shanghai Composite Index gained 1.2 percent. China is accelerating investment approvals to support growth, with the size of stimulus estimated at between 1 trillion yuan ($157.7 billion) and 2 trillion yuan, Dong Tao, a Hong Kong-based economist at Credit Suisse, wrote in a note today.
The Micex Index jumped 1.2 percent in Moscow, led by OAO Lukoil, Russia’s second-largest oil producer, on better-than- estimated earnings. The FTSE/JSE Africa All Share Index (JALSH) gained 0.8 percent and India’s Sensex Index rose 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
