BLBG: Asian Shares Rally With Metals as European Stocks Hold Advance
Euro near weakest since April amid policy divergence bets
Nickel leads rebound in base metals amid see-sawing week
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Asian stocks advanced before the Thanksgiving holiday in the U.S. as crude oil maintained its gains, and European stocks held their advance from Wednesday. Australia’s dollar retreated amid a record pullback in business investment.
The Stoxx Europe 600 Index rose 0.3 percent as of 8:19 a.m. London time. The Asia-Pacific equity benchmark rallied from a one-week low as shares in PetroChina Co. rose for a sixth day after the company said it will sell its stake in a pipeline company. U.S. crude held at about $43 a barrel amid signs of a slowdown in American drilling. The Aussie fell on the biggest ever drop in private capital spending, while Australia’s biggest mining company, BHP Billiton Ltd., extended its slump to a 10-year low. Industrial metals rebounded.
Global stocks have rallied around the world from a two-year low reached in September as investors became more comfortable with the idea of higher U.S. borrowing costs. The odds the Federal Reserve will end a seven-year period of near-zero interest rates when it meets next month remain above 70 percent, while expectations are for the European Central Bank to go the other way by expanding asset purchases. Data on U.S. durable goods orders Wednesday rounded out a picture of stabilization in manufacturing, even as consumer spending rose less than economists forecast.
“U.S. economic data was in line with expectations and provides some comfort,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “Investors expect markets will rise after the U.S. rate hike since uncertainty will be dispelled. They want to buy stocks now.”
Stocks
The Stoxx Europe index extended the previous session’s 1.5 percent surge while the U.K.’s FTSE 100 advanced 0.2 percent.
The MSCI Asia Pacific Index rose 0.4 percent, after sinking Wednesday to its lowest level since Nov. 18. The Topix index in Japan pared the previous session’s losses, climbing 0.5 percent.
Hong Kong’s Hang Seng Index was little changed, while Shanghai shares fell 0.3 percent.
“Global oil prices have recovered slightly, and that has helped certain resource-rich countries,”said Geoffrey Ng, director at Fortress Capital Asset Management Sdn. in Kuala Lumpur. “There has been stronger economic support from the Chinese government, and it hasn’t been just support internally but also the leaders have been engaging with countries in the region.”
Australia’s S&P/ASX 200 Index climbed 0.3 percent after two days of losses. BHP Billiton was an exception, falling to its lowest level since October 2005 after JPMorgan Chase & Co. cut its rating on the Sydney-traded stock to underweight, from neutral. Macquarie Group Ltd. also said BHP’s A-level credit rating is at risk, along with that of Rio Tinto Ltd. Rio fell for a fifth straight day.
The S&P/NZX 50 Index in Wellington rose 0.3 percent, while South Korea’s Kospi index was up 1.1 percent as Samsung Electronics Co. gained.
Standard & Poor’s 500 Index futures advanced 0.1 percent after the gauge capped a third daily move of less than 0.2 percent on Wednesday. The Russell 2000 Index of small-cap equities led gains in the U.S., where volumes in the S&P 500 were more than 30 percent below the 30-day average. Brazilian assets were sold off amid the widening of a graft probe.
Currencies
The Aussie weakened a second day, slipping 0.4 percent to 72.23 U.S. cents. The government reported a 9.2 percent drop in third-quarter business investment, the steepest in data going back to 1989, according to calculations by Bloomberg. The RBA has cut key rates to a record 2 percent in its bid to ignite an economy hobbled by a slowdown in China.
The euro weakened 0.2 percent to $1.0608 after touching its weakest level in seven months Wednesday amid mounting speculation over the outlook for ECB stimulus. Euro-area policy makers meet Dec. 3.
“We expect the ECB will cut the deposit rate by more than the market expects next week,” said Mansoor Mohi-uddin, senior markets strategist at Royal Bank of Scotland Group Plc. in Singapore. “This should keep the euro a sell on rallies into the meeting and allow the euro to test $1.05 if the ECB meets our expectations.”
Commodities
West Texas Intermediate oil retreated 0.4 percent to $42.89 a barrel, bringing its advance over the past week to about 6 percent.
While U.S. data Wednesday showed an increase in oil stockpiles, a report from Baker Hughes Inc. indicated the number of active oil rigs fell to 555, the least in five years. Crude has slumped 19 percent this year amid concern the world’s biggest producers are unwilling to act to abate a global surplus.
Tensions between Russia and Turkey continued to simmer Wednesday, with Russian state media suggesting the downing of its country’s warplane near Turkey’s border with Syria constituted grounds for war.
While President Vladimir Putin has ruled out any military retaliation against Turkey, a NATO member, the U.S. and Germany have stepped up their calls for an easing in the scuffle. Turkish President Recep Tayyip Erdogan maintained the Russian jet was shot down after failing to heed warnings and crossing into his nation’s airspace, while emphasizing he didn’t want the issue to be escalated.
Industrial metals gained, with nickel climbing for the third day to its highest level in a week, as Chinese smelters mull production cuts to support prices amid weak demand in the world’s biggest consumer. Nickel, used for stainless steel, gained as much as 4.7 percent to $9,330 a metric ton on the London Metal Exchange, rallying from near its lowest price in more than a decade. Copper rose 2.5 percent after slipping 1.3 percent last session.
(An earlier version of this story was corrected to amend the date of the MSCI Asia Pacific Index’s low.)
