BLBG: Stocks Rise as Oil Advance Stokes Gains for Commodity Currencies
WTI climbs as stockpiles seen falling, Saudi budget revealed
Australia, New Zealand dollars rise as Norwegian krone gains
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Stocks rallied around the world and currencies of commodity-producing nations strengthened as oil climbed amid expectations U.S. stockpiles will fall for a second week. China’s equity market rebounded after a late retreat.
The MSCI All Country World Index rose 0.2 percent while European stocks rebounded in thin trading, trimming their worst December drop since 2002, with all industry groups except miners advancing. Oil gained as investors weighed forecasts for falling U.S. stockpiles against a Saudi budget that implies crude prices will remain at current levels through 2016. The Australian and New Zealand dollars gained with the Norwegian krone.
“A better tone triggered by a stable markets in Asia has spilled over to the European session with stocks and commodities rising while the weaker dollar has also been lending a hand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “For oil markets the attention will turn to tomorrow’s inventory report, which is expected to show a second weekly reduction.”
The global oil glut and China’s economic weakness are fanning the biggest annual drop in commodity prices in seven years, according to a Bloomberg gauge of raw materials. That’s undermining corporate earnings and hindering central bank attempts to ignite inflation. Data on U.S. home prices and consumer confidence are due for release Tuesday.
The Bloomberg Commodity Index is down about 25 percent in 2015. An MSCI gauge of developed and emerging equity markets slumped 3.8 percent this year through Monday, while global bonds lost 2.4 percent, according to a Bank of America Merrill Lynch index.
Stocks
The Stoxx Europe 600 Index added 0.8 percent at 11:11 a.m. in London, with auto shares leading gains. The number of shares changing hands was 37 percent lower than the 30-day average.
The European benchmark Stoxx 600 is down 4.4 percent this month, heading for its worst December since 2002, amid a disappointing increase in European Central Bank stimulus, along with the commodity rout.
The index lost a big part of its annual advance amid concern over global growth, just as the Federal Reserve raised its interest rates for the first time in almost a decade. After surging as much as 21 percent to a record in April, the Stoxx 600 slid 12 percent through yesterday. It’s still up 7.3 percent this year, poised for a fourth annual advance.
U.K. stocks gained as markets reopened after the country’s holiday period. The FTSE 100 Index increased 0.3 percent while bonds rose, driving the 10-year yield 1 basis point lower to 1.91 percent. U.K. natural gas jumped 6 percent.
Standard & Poor’s 500 Index futures climbed 0.4 percent. The S&P 500 dropped 0.2 percent Monday, after earlier falling as much as 0.8 percent. With just three trading days left in the year, the U.S. benchmark is little changed for 2015.
The MSCI Asia Pacific Index climbed 0.4 percent. The measure is heading for its first back-to-back annual loss since 2002 as a deceleration in the region’s biggest economy and the fall in oil and commodity prices undermined earnings. The Shanghai Composite tumbled Monday as slumping industrial profits added to concern that looming changes to the country’s listing regime and the expiration of a share-sale ban will hurt demand for its stocks.
The number of Hang Seng Index shares changing hands was about 60 percent below the 30-day average, while volume in Shanghai was about 40 percent lower, according to data compiled by Bloomberg. The Hang Seng Index added 0.4 percent and a gauge of Chinese shares in Hong Kong was little changed after tumbling the most in a month with its Shanghai counterpart on Monday.
Japan’s Topix index advanced 0.9 percent and South Korea’s Kospi was little changed. Gains by Australian banks offset losses by the big miners, Rio Tinto Ltd. and BHP Billiton Ltd., with the S&P/ASX 200 Index rising 1.2 percent as trade resumed after Christmas holidays.
New Zealand’s benchmark stock gauge rose 1.1 percent for a ninth straight advance and a record close. The South Pacific country’s shares rose about 13 percent in 2015, a fourth straight annual advance.
Commodities
West Texas Intermediate crude advanced 14 cents to $36.95 a barrel while Brent traded 13 cents higher at $36.75.
U.S. crude inventories probably fell for a second week, according to a Bloomberg survey before government data Wednesday. Saudi Arabia’s 2016 spending plan assumes a Brent price of $37 a barrel, according to John Sfakianakis, a Riyadh-based economist at Ashmore Group Plc and a former government adviser.
Natural gas advanced 1.1 percent in the U.S. to $2.253 per million British thermal units, adding to a surge of 10 percent on Monday. Futures have posted a record late-December rally as unseasonably warm weather conditions that had curbed demand for heating fuel are forecast to end. The price of the fuel in the U.K. rose to 34.41 pence a therm.
Gold for immediate delivery rose 0.1 percent to $1.069.83 an ounce. The metal is heading for a third annual decline as expectations for tighter monetary policy in the U.S. curb demand for the metal. Silver increased 0.4 percent and platinum added 0.5 percent.
Copper gained 1.6 percent to $211.20 a pound in New York, paring a drop of 2.1 percent on Monday that was spurred by concerns about the strength of demand in China. Nickel fell 1.3 percent in London on the first day of trade after a U.K. public holiday, while zinc added 2 percent.
Currencies
The Bloomberg Dollar Spot Index was steady. The gauge that tracks the U.S. currency against 10 of its most-traded peers has retreated about 0.1 percent since Central bank increased the interest rate earlier in December.
The Norwegian and Australian currencies were among those that gained the most against the dollar, with the krone appreciating 0.3 percent to 8.6791. The Aussie jumped as much as 0.4 percent to 72.80 U.S. cents before being 0.3 percent firmer at 72.72 cents. New Zealand’s kiwi gained 0.3 percent to 68.67 U.S. cents. The three nations currencies have each still lost at least 11 percent against the dollar this year as prices of their key exports slid.
The euro advanced to $1.0971. The joint currency will fall about 4 percent against the dollar in 2016, according to the consensus of analyst forecasts compiled by Bloomberg, though two of the biggest participants in the market -- Barclays Plc and Bank of America Corp.’s Merrill Lynch unit -- expect it to drop through parity with the greenback.
Emerging Markets
Emerging-market equities fell, extending the biggest annual decline in four years, as persistent weakness in commodities weighs on the global growth outlook.
The MSCI Emerging-Markets Index dropped for a second day, with health care and utility stocks leading declines. A gauge tracking 20 currencies in developing nations retreated 0.1 percent, as Russia’s ruble weakened 0.7 percent versus the dollar to a record low, extending yesterday’s 2.2 percent drop.
The Tadawul All Share Index, Saudi Arabia’s benchmark stocks gauge, dropped as much as 3.4 percent after the kingdom announced one of its biggest shake-ups in economic policy. Forward contracts used to speculate on the riyal in the next year were poised for the highest level since March 1999.
Saudia Arabia, confronting a drop in oil prices and mounting regional turmoil, reduced outlays and allocated the biggest part of government spending in next year’s budget to defense and security. It cut energy subsidies and intends to cut spending in 2016 to 840 billion riyals ($224 billion) from 975 billion riyals this year.
