BLBG: Stocks Rebound in U.S., Europe While Emerging Market Shares Fall
Stocks rose, with the Standard & Poor’s 500 Index (SPX) rebounding from the biggest drop in three weeks, while Spain’s two-year yield slid to a record. Emerging-market stocks fell with industrial metals after China’s service industries dropped.
The Standard & Poor’s 500 Index added 0.1 percent while the Stoxx Europe 600 Index gained 0.5 percent at 9:30 a.m. in New York. The MSCI Emerging Markets Index lost 1 percent. The yield on Spain’s two-year note slid as low as 1.05 percent, the lowest since Bloomberg started tracking the data in 1993. The yen strengthened against 12 of 16 major peers. Copper dropped 0.8 percent, gold rose 0.5 percent and South African corn jumped to a record.
U.S. stocks fell yesterday, snapping a streak of rallies on the first session of the year since 2009, as investors sold shares following the best annual gain since 1997. Spanish bonds gained today as a report showed unemployment in the nation dropped the most in six months. Federal Reserve Chairman Ben S. Bernanke is due to speak today at an economics conference in Philadelphia.
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“When there’s such a large move in the market like yesterday, there’s a little bit of a knee-jerk reaction in the morning,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a telephone interview. “It kind of entices people into the market,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a telephone interview. “When I look around there’s not a lot of places to go with stocks. If we shake people up in the masses like we did yesterday I think it’s OK.”
European Markets
Today’s gain in the Stoxx 600 trimmed this week’s decline to less than 0.1 percent. Trading volumes were 7.5 percent above the 30-day average, according to data compiled by Bloomberg. The gauge jumped 17 percent last year for its biggest annual rally since 2009.
Next Plc (NXT) jumped 9.9 percent after the U.K.’s second-largest clothing retailer increased its profit forecast and said it planned to pay a special dividend. Remy Cointreau SA (RCO) slipped 2.1 percent after Frederic Pflanz resigned as chief executive officer.
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“Next is a good surprise for the market and the U.K. economy,” said Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva. “Otherwise, we are seeing a quiet start to the year. My gut feeling is, this year, we will see the market moving a lot around the pace of tapering in the U.S.”
Bernanke Speech
Bernanke is scheduled to make remarks today at the American Economic Association in Philadelphia, four weeks before his term expires on Jan. 31. Fed officials said Dec. 18 they would trim monthly purchases of bonds to $75 billion from $85 billion starting this month.
About three shares fell for each that rose on the MSCI Emerging Markets Index, extending this week’s loss to 1.7 percent, the worst week in two months. The Hang Seng China Enterprises Index slid 2.6 percent, while equity gauges in Shanghai, Seoul, Jakarta and Turkey declined more than 1 percent. South Africa’s FTSE/JSE Africa All Shares Index retreated 1 percent.
China Slowdown
China’s non-manufacturing purchasing managers’ index fell to 54.6, the lowest since August, from 56 in November. Data on Jan. 1 showed the official gauge for factory output dropped more than economists projected to a four-month low. An HSBC Holdings Plc and Markit Economics Ltd. index of Chinese manufacturing published yesterday slipped to 50.5 from 50.8 in November, matching the median estimate in a Bloomberg survey.
“You cannot count on China to contribute to global growth now as the economy is still under structural adjustment,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai. “There’s no excitement in the macroeconomy and in this case it’s difficult for the stock market to have good performance.”
Spain’s 10-year yield fell to as low as 3.89 percent, the least since May 2010. Unemployment (SPUECHNG) declined 107,570 last month, according to Ministry of Labor in Madrid, the biggest decrease since June.
The additional yield investors demand to hold Spanish 10-year debt over similar-maturity German bunds dropped below 200 basis points for the first time since May 2011. The Italy-Germany spread also slipped below 200 basis points, for the first time since July 2011.
