Chinese shares close out their best week in four months
Dollar up for second day before U.S. consumer sentiment data
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European shares rose with Asian stocks, extending a rally that’s added $4.1 trillion to global equities this month, as a run of weaker-than-estimated economic reports from China, Europe and the U.S. boosted speculation central banks will maintain stimulus measures.
Energy stocks led gains in Europe as oil rebounded after a four-day decline. The Shanghai Composite Index had its best week in four months on optimism China will accelerate reforms of state-owned companies. The dollar strengthened, damping emerging-market currencies, before U.S. reports on consumer sentiment and industrial production. U.S. equity-index futures retreated.
Bad news has proved positive for equities this month as traders speculate that ongoing global uncertainty will stay the Federal Reserve’s hand until 2016 and that policy makers from Europe to Asia will keep or increase what’s in some places a record level of monetary stimulus. Chinese stocks have rallied as the government unveiled further reforms of state-run industries and weak economic reports confirmed policy makers have more room to loosen monetary policy.
“You may have no rate hike this year from the Federal Reserve and an extension of stimulus in Europe and in Japan so that’s giving a boost to equities,” said John Plassard, a senior-equity sales trader at Mirabaud Securities in Geneva. “At the same time, crude rebounded, and earnings in the U.S. and Europe were not so bad.”
Stocks
The Stoxx Europe 600 Index advanced 0.4 percent at 7:23 a.m. in New York, after gaining as much as 1 percent. Glencore Plc climbed 2.7 percent as BlackRock Inc. increased its position on the miner. Carrefour SA rose 5.5 percent after the French grocer reported a gain in third-quarter revenue.
Nestle SA declined 2.3 percent after the world’s largest food company reduced its annual revenue forecast and Hugo Boss AG tumbled 10 percent as it cut sales and earnings estimates for 2015 amid deteriorating third-quarter results in China and the U.S. ICAP Plc slid 2.9 percent after losing its last buy rating, while Volkswagen AG lost 3.3 percent as a report showed its market share in Europe declined last month.
Standard & Poor’s 500 Index E-mini futures expiring in December dropped 0.2 percent. Wynn Resorts Ltd. lost 8.6 percent in early New York trading after reporting revenue that trailed analysts’ estimates following a drop in gambling in Macau. Las Vegas Sands Corp. also declined.
Youku Tudou Inc. jumped 22 percent after Alibaba Group Holding Ltd. offered to pay $3.6 billion in cash for its remaining stake in the video website. Alibaba rose 1.1 percent.
General Electric Co. is among seven S&P 500 companies reporting earnings today. Data on Friday will show the University of Michigan’s preliminary index increased in October, while industrial production slipped in September for a second month, according to the median economist forecast.
Emerging Markets
The MSCI Emerging Markets Index added 0.1 percent, leaving it 0.7 percent higher in its third weekly increase, the longest run of gains in five months. The Malaysian ringgit slid from an eight-week high versus the dollar, leading currencies lower.
The Hang Seng China Enterprises Index advanced to 0.8 percent in Hong Kong, taking its rise since the end of September to 13 percent. The Shanghai gauge increased 1.6 percent Friday, extending the weekly gain to 6.5 percent. Friday’s trading volumes were 34 percent higher than the 30-day average and margin debt advanced for a sixth day on Thursday, signs the market was luring back investors.
The Shanghai Composite has risen 16 percent from an August low amid speculation that policy makers will introduce more measures to boost growth after a rout in equities that erased almost $5 trillion of market value. Data released this week showed consumer prices rose at a slower pace in September, leaving more room to ease monetary policy.
The ringgit fell 1.4 percent and Indonesia’s rupiah lost 0.9 percent. A gauge of 20 developing-nation currencies slid 0.4 percent.
Turkey’s lira extended declines, sliding 0.8 percent. The military said it shot down an aircraft on the Syrian border, without specifying what type, after it didn’t respond to three warnings. NTV television reported that the aircraft was an unmanned drone, without saying how it got the information.
Russia’s ruble declined 0.7 percent.
Commodities
West Texas Intermediate crude rose 1.2 percent to $46.92 a barrel, trimming its slide in the week to 5.2 percent, still the most since the start of August. Brent for December settlement gained 0.8 percent Friday to $50.15.
Russian Energy Minister Alexander Novak told reporters in Astana, Kazakhstan Thursday that the country wouldn’t rule out discussing a reduction in production with OPEC and non-OPEC countries. Oil has tumbled as U.S. stockpiles swelled. Inventories rose by the most in six months in data released this week, keeping inventories above the five-year seasonal average.
Most metals declined Friday. China, the world’s biggest consumer of industrial metals and the epicenter of last quarter’s market gyrations, reported an increase in aggregate financing to 1.3 trillion yuan ($205 billion), ahead of the 1.2 trillion yuan median estimate of economists. The data, released late Thursday, suggests increased infrastructure spending from the government and five rate cuts since November are helping boost loan demand.
Gold for immediate delivery slid 0.5 percent to $1,177.33 an ounce, trimming its weekly gain to 1.8 percent. Bullion touched its highest level since June on Thursday as prospects for U.S. rates staying near zero for longer boosted demand.
Currencies
The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, climbed 0.3 percent in a second day of gains, paring its drop in the week to 0.3 percent.
“We would expect the data to firm up in the U.S. and for that to drive U.S. dollar support,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “The employment situation is strong enough and it’s down to the activity outlook,” and whether the global risks settle down between now and December, allowing the Fed to raise rates, he said.
The Australian dollar led a pullback in major currencies versus the greenback, slipping 0.8 percent after the central bank said the over-heated housing market could be starting to slow while rapid construction in some areas is creating an oversupply. New Zealand’s dollar retreated from a more than three-month high, losing 0.8 percent to 67.96 U.S. cents after inflation came in below the central bank’s target band.
The euro slid 0.4 percent to $1.1344, while the yen fell 0.2 percent to 119.10 per dollar, paring its weekly gain to 1 percent.
Bonds
European bonds advanced, with Spanish, Italian and German securities extending weekly gains. The European Central Bank is due to meet next week amid speculation it may expand its stimulus measures to support the economy.
The yield on German 10-year bonds was at 0.55 percent, down from 0.62 percent at the end of last week, while the yield on similar-maturity Spanish bonds slid two basis points to 1.80 percent.
The yield on U.S. 10-year Treasuries fell one basis point to 2.01 percent, down eight basis points from Oct. 9.
The cost of insuring investment-grade corporate debt fell for the first time in four days. The Markit iTraxx Europe Index, which tracks credit-default swaps on investment-grade companies, declined one basis point to 80 basis points. A measure of swaps tied to junk-rated companies fell for a second day, dropping five basis points to 334 basis points.
