BLBG:Stocks, Commodities Rise on U.S. Budget Optimism; Dollar Weakens
Stocks around the world snapped the longest losing streak in almost a year on optimism a deal can be reached to avoid automatic spending cuts and tax increases. Oil led commodities higher while the dollar and Treasuries fell.
The MSCI All-Country World Index (MXWD) advanced 0.6 percent as of 8:52 a.m. in London, snapping an eight-day decline. The Stoxx Europe 600 Index climbed 0.9 percent. Standard & Poor’s 500 Index futures added 0.4 percent. Oil increased 1.1 percent in New York and copper gained 1.2 percent in London. Treasury 10- year yields rose three basis points, or 0.03 percentage point, to 1.61 percent. The dollar weakened against all 16 major counterparts.
House Speaker John Boehner and White House Press Secretary Jay Carney both described a Nov. 16 meeting on the so-called fiscal cliff as “constructive.” European finance ministers are due to meet in Brussels tomorrow as they aim to craft a plan for Greece’s next aid payout. Data today may show sales of previously owned U.S. homes stayed at close to a two-year high last month.
“This is good news and a relief for the market,” said Bruno Ducros who helps oversees about $3.9 billion in equities at CamGestion in Paris. “If we apply the automatic tax increases and spending cuts, there is risk of a very strong slowdown in the U.S. That is what scared the market. No one wants to take responsibility for a major crisis in the U.S.”
Middle East Tension
Crude for January delivery rallied to $87.81 a barrel after Israel said it may expand an assault on the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu said yesterday that the army is prepared to “significantly widen the operation,” raising concern Middle East unrest will disrupt oil supplies.
The Stoxx 600 (SXXP) rebounded form the biggest weekly drop in five months as all 19 industry groups advanced. BP Plc rallied 2.4 percent as the Sunday Times reported that Europe’s second- biggest oil company is planning a 3.7 billion-pounds ($5.9 billion) buyback. HSBC Holdings Plc gained 1.7 percent in London after saying it’s in talks to sell its stake in Ping An Insurance (Group) Co. (2318), China’s second-largest insurer.
SAS AB jumped 28 percent after the Swedish airline won the backing of unions representing pilots and most of its cabin crew for plans to eliminate jobs and shrink the business. Fugro NV plummeted 19 percent, the biggest drop since 2003, after the Dutch oil-services company said Chief Executive Officer Arnold Steenbakker will leave and cut its forecasts.
Obama ‘Confident’
Cisco Inc. (CSCO) rose 0.6 percent in German trading after the world’s largest maker of computer-networking equipment agreed to pay $1.2 billion for closely held Meraki Inc.
The S&P 500 Index rose 0.5 percent on Nov. 16, the first increase in four days, after Boehner said talks with Obama were constructive and he would accept an increase in government revenue if coupled with spending cuts.
“I am confident we can get our fiscal situation dealt with,” Obama said at a news conference in Bangkok yesterday, spurring optimism lawmakers would reach an agreement to avoid a $607 billion deficit-cutting package known as the fiscal cliff.
The Dollar Index (DXY) fell 0.3 percent today, the most in almost two weeks. The U.S. currency weakened 0.3 percent to $1.2775 per euro and was little changed at 81.27 yen. The Australian dollar climbed 0.4 percent to $1.0378. The won strengthened 0.5 percent to 1,086.98 per dollar, according to data compiled by Bloomberg.
Greek Meeting
European finance chiefs are due to meet in Brussels tomorrow for the second time in a week after they agreed seven days ago to keep Greece’s bailout aid flowing. In addition to a disagreement between the European Union and International Monetary Fund over softening Greece’s debt target, the ministers will attempt to re-engineer the current bailout without asking taxpayers for more money.
The cost of insuring against default on European corporate debt fell the most in a month, with the Markit iTraxx Crossover index of credit-default swaps linked to 50 mostly junk rated companies dropping 24.5 basis points to 542.5 basis points.
Copper for delivery in three months advanced to $7,698.25 a metric ton on the London Metal Exchange, climbing the most since Nov. 7. All six main industrial metals traded on the bourse gained. Gold for immediate delivery rose 0.6 percent to $1,724.15 an ounce in London, gaining for the first session in three. Silver, platinum and palladium also advanced.
Purchases of existing dwellings in the U.S. held at a 4.75 million annual rate last month, according to the median forecast in a Bloomberg survey before today’s report from the National Association of Realtors. Housing starts eased in October to an 840,000 pace from a four-year high of 872,000 units in September, government data may show Nov. 20.
Emerging-market stocks rose for the first time in eight days, led by exporters. Samsung Electronics Co., which got about 28 percent of its third-quarter revenue from America, and Cosco Pacific Ltd., the container-terminal arm of China’s largest shipping group, gained more than 1.9 percent. The Micex index in Russia, the world’s biggest energy exporter, headed for the highest close in a week.
To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
