BLBG:Stocks Gain on Earnings as Bonds Rise, Commodities Rally
Global stocks rose, with Europe’s benchmark stock index climbing to a five-year high, as companies including ING Groep NV reported better-than-estimated earnings and Toyota Motor Corp. (7203) raised its forecast. Bonds gained and commodities climbed from a four-month low, led by oil.
The MSCI All-Country World Index advanced 0.3 percent to 396.67 at 10:10 a.m. in London. Standard & Poor’s 500 Index (SPA) futures rose 0.5 percent. The yield on 10-year Treasury notes fell three basis points to 2.65 percent and rates on similar-maturity Italian debt dropped three basis points to 4.14 percent. The yen weakened against all but two of its 16 major peers. The S&P GSCI gauge of 24 commodities rallied 0.6 percent as West Texas Intermediate crude jumped 0.8 percent.
ING, the financial-services company, reported third-quarter net income that fell less than analysts anticipated, and Toyota, the world’s largest automaker, raised its full-year profit forecast by 13 percent. U.S. growth and payrolls figures this week may give clues on the outlook for Federal Reserve policy. The level of slack in America’s economy justifies an accommodative monetary-policy stance, according to two separate papers by Fed officials.
“Earnings can accelerate in Europe over a period of three years because they remain well below their 2007 peaks,” Stephen Macklow-Smith, portfolio manager at JPMorgan Asset Management in London, said by phone. “That is the next leg of the equity rally in Europe.”
Alstom Climbs
The Stoxx Europe 600 Index advanced 0.5 percent to the highest level since May 2008. ING jumped 6.2 percent. Alstom SA (ALO), the French maker of power equipment and trains, rallied 5.1 percent after operating profit topped estimates. Vestas Wind Systems A/S surged 13 percent to a two-year high after the world’s largest wind turbine maker boosted its outlook for 2013.
Japan’s Topix advanced for the first time in four days. Toyota increased 0.5 percent as NHK reported the company would raise its earnings forecast. The company lifted its full-year profit projection by 13 percent in a statement as Tokyo markets shut.
The gain in S&P 500 futures indicated the U.S. gauge will rebound from yesterday’s 0.3 percent drop. Tesla Motors Inc. (TSLA) slid 10 percent in early New York trading after the maker of electric cars reported vehicle sales that missed some estimates and lower revenue from regulatory credits.
A government report tomorrow is forecast to show the U.S. economy grew at a 2 percent annualized rate in the third quarter, compared with a 2.5 percent increase in the previous three months. Economists predict data on Friday will show payrolls climbed by 120,000 in October and the unemployment rate increased to 7.3 percent from 7.2 percent in the previous month, according to a separate survey.
Fed Stimulus
Fed policy makers last week signaled diminishing concern over higher borrowing costs as they maintained their $85 billion-a-month bond buying program and sought more evidence of sustained growth before tapering the record stimulus. The Fed won’t reduce the pace of purchases until its March 18-19 meeting, according to the median estimate in a Bloomberg survey of economists conducted Oct. 17-18.
William English, head of the Fed’s Division of Monetary Affairs, wrote that the strategy of not raising interest rates if unemployment is above 6.5 percent has provided effective stimulus, and that an even lower threshold could be helpful. A paper by David Wilcox, the research and statistics chief, says that slack in the economy argues for loose policy at a time of contained expectations for inflation.
Italian Bonds
Italian bonds rose for the first time in three days as the nation prepared to close a sale of inflation-linked bonds aimed at retail investors two days early after receiving orders for 16.8 billion euros ($23 billion) of the securities.
Spain’s 10-year yield fell two basis points to 4.09 percent and Germany’s also dropped two basis points, to 1.73 percent.
The yen weakened most against the South African rand and Norwegian krone. It dropped 0.2 percent to 133.01 per euro and was little changed at 98.50 per dollar.
The S&P GSCI rebounded from the lowest level since June 26 yesterday, climbing for the first time in seven days. WTI gained to $94.09 a barrel, gasoline jumped 0.8 percent and heating oil advanced 0.6 percent.
Gasoline and distillate inventories, including heating oil and diesel, fell last week in the U.S., the world’s biggest oil consumer, a Bloomberg News survey showed before an Energy Information Administration report today at 10:30 a.m. in Washington. Gold climbed 0.4 percent to $1,316.96 an ounce, the first advance in seven days.
---- With assistance from Adam Haigh in Sydney, Emma O’Brien in Wellington, Yoshiaki Nohara in Tokyo, Claudia Carpenter, Paul Dobson, Andrew Rummer and in London. Editors: Stephen Kirkland, Stuart Wallace
To contact the reporters on this story:s Stephen Kirkland in London at skirkland@bloomberg.net; Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
