SF: Commodities Rise on U.S. Budget Optimism; Dollar Weakens
Nov. 19 (Bloomberg) -- Global stocks snapped the longest losing streak in almost a year on optimism a deal can be reached to avoid automatic U.S. spending cuts and tax increases. Oil led commodities higher. The dollar and Treasuries fell.
The MSCI All-Country World Index advanced 1.1 percent as of 9:30 a.m. in New York, ending an eight-day decline, and the Standard & Poor’s 500 Index added 0.6 percent. Oil jumped more than 2 percent in New York and copper gained 1.9 percent in London. Treasury 10-year yields rose four basis points, or 0.04 percentage point, to 1.62 percent. The dollar weakened against all of its 16 major counterparts.
House Speaker John Boehner and White House Press Secretary Jay Carney 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 close to a two-year high last month.
“This is good news and a relief for the market,” said Bruno Ducros, who helps oversee 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.”
U.S. Stocks
Among U.S. stocks, Cisco Inc. rose 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 fell 0.3 percent, the most in almost two weeks. The U.S. currency weakened 0.2 percent to $1.2768 per euro and fell 0.2 percent to 81.19 yen. The Australian dollar climbed 0.6 percent to $1.0401. The won strengthened 0.5 percent to 1,086.98 per dollar.
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.
Crude Rallies
Crude for January delivery rallied more than 2 percent to $88.47 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 rebounded from the biggest weekly drop in five months as all 19 industry groups advanced. BP Plc rallied 2.8 percent after the Sunday Times reported that Europe’s second-biggest oil company is planning a 3.7 billion-pound ($5.9 billion) buyback. HSBC Holdings Plc also gained 2.9 percent in London after saying it’s in talks to sell a stake in Ping An Insurance (Group) Co., China’s second-largest insurer.
European Movers
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 as much as 23 percent, the biggest drop since 2003, after the Dutch oil-services company cut its forecasts and said Chief Executive Officer Arnold Steenbakker will leave.
