BLBG:Stocks Climb As Gold Gains To 16-Week High On Stimulus Outlook
Stocks advanced around the world and gold climbed to a 16-week high on speculation central banks in the U.S. and China will ease monetary policy to support growth. Soybeans rallied to a record and emerging-market currencies rose.
The MSCI All-Country World Index (SPX) advanced 0.5 percent at 8:00 a.m. in London, and futures on the Standard & Poor’s 500 Index added 0.3 percent. The Stoxx Europe 600 Index gained 0.3 percent. Gold for immediate delivery climbed for a seventh day, up as much as 0.6 percent to $1,665.31 an ounce, the most since May 2. Soybeans touched an all-time high of $17.4475 a bushel. South Korea’s won and Malaysia’s ringgit climbed the most in more than two weeks.
Minutes of the U.S. Federal Reserve’s last meeting showed many members favored more stimulus unless the pace of the economic recovery picks up. People’s Bank of China Governor Zhou Xiaochuan said adjustments to interest rates and banks’ reserve requirements are still possible after the central bank stepped up temporary cash injections this month. A preliminary report today showed China’s manufacturing may contract at a faster pace in August.
“This is the most explicit statement around quantitative easing we’ve seen from the Fed, and should be very good for markets,” Warren Hogan, chief economist at Australia & New Zealand Banking Group Ltd. (ANZ), said in a Bloomberg Television interview. “Markets are more and more resilient to European news and there’s a clear commitment to keep this thing working. China’s economy is softer than where the government would like it to be and we want to see some good numbers soon.”
Qantas, HP
About two stocks rose for every one that fell on the MSCI Asia Pacific Index, which headed for its highest close since May 4. International Consolidated Airlines Group SA and Air France- KLM added at least 0.7 percent after rival Qantas Airways Ltd. (QAN) posted its first annual loss in at least 17 years. Qantas rose 2.6 percent in Sydney as the airline canceled an order for 35 Dreamliner jets, easing concern about funding requirements.
Federal Reserve Bank of Chicago President Charles Evans told reporters in Beijing today that easing policies would support economic growth around the world, including in China, broadening his call for more stimulus in the U.S. The dollar weakened against most of its major peers.
The greenback was at $1.2555 per euro, the weakest since July 3. Demand for Europe’s shared currency was tempered before data that may show further contraction in the region’s manufacturing and services industries.
China’s Manufacturing
The preliminary reading for a purchasing managers’ index for China released today by HSBC Holdings Plc and Markit Economics was 47.8 after July’s final 49.3 figure. If confirmed, it would be the weakest level since November. It would also mark the 10th month the gauge was below 50, representing a contraction, the longest run of such readings in the index’s eight-year history.
China’s yuan traded near a seven-week high on speculation stimulus at home and in the U.S. will support capital inflows and exports. China’s central bank conducted 145 billion yuan ($22.8 billion) of reverse-repurchase agreements today to add cash to the financial system, after injecting a record 220 billion yuan on Aug. 21.
Gold’s seven-day advance is the longest such streak since June. Assets in gold-backed exchange-traded products reached 2,442.263 metric tons yesterday, data compiled by Bloomberg show, and are now the world’s fourth-largest hoard when compared with national reserves. Silver added 2.2 percent.
Platinum, Soybeans
Platinum gained for a sixth day in its longest advance since October. Contracts for immediate delivery rose as much as 1.7 percent to $1,561.50 an ounce, the highest level since May 3, as violence at mines in South Africa, the world’s top producer, disrupted production.
Soybeans for November delivery rose 0.3 percent to $17.3225 a bushel, while December-delivery corn added 0.1 percent to $8.3525 a bushel after touching a record $8.49 on Aug. 10. The worst U.S. drought in half a century curbed crop supplies, driving the S&P GSCI gauge of 24 raw materials up for a fourth day to the highest level since May.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Rishaad Salamat in London at rishaad@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
