BLBG: Stocks Rise Around the World; Commodities Gain, Treasuries Fall
Stocks rose around the world, commodity prices rallied and Treasuries fell on speculation China will broaden efforts to boost growth in the world’s third-largest economy. The Shanghai Composite Index jumped the most in four months.
BHP Billiton Ltd. and Alcoa Inc. added more than 3 percent as copper and aluminum climbed on optimism metals consumption in China will increase. Aluminum Corp. of China Ltd. surged 9 percent as a former statistics chief said China’s Premier Wen Jiabao will announce a new stimulus package tomorrow. Volkswagen AG, the biggest overseas carmaker in China, gained 4.3 percent.
The MSCI World Index added 0.4 percent to 708.21 at 12:42 p.m. in London. The deepening global recession, a third government rescue for Citigroup Inc. and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have sent the of 23 developed countries to a 23 percent drop this year, the worst start since the gauge was created in 1970.
“The Chinese are about to come up with another huge fiscal push,” said Philip Manduca, who oversees $1 billion as head of investments at ECU Group in London. “They are going to pump an enormous amount of money in. This will help in the long term,” he said in a Bloomberg Television interview.
Treasuries, Yen
Treasuries fell, extending the worst losses in five years, while gold and the yen slipped as the rally in stocks curbed demand for assets perceived as safe. The yield on the 10-year Treasury note rose 10 basis points to 2.98 percent, according to BGCantor Market Data. Gold slid for an eighth day and the yen traded as low as 99.36 per dollar, the weakest since Nov. 10.
Futures on the Standard & Poor’s 500 Index rose 1.7 percent. The gauge closed below 700 for the first time since October 1996 yesterday after Federal Reserve Chairman Ben S. Bernanke said the banking system still hasn’t stabilized.
Europe’s Dow Jones Stoxx 600 Index climbed 1.6 percent, rebounding from the lowest level since 1996. Zurich Financial Services AG climbed after JPMorgan said Switzerland’s biggest insurer’s “solvency position is strong.”
The MSCI Asia Pacific Index rose 0.6 percent as China’s Jiangxi Copper Co. and Japan’s Seven & I Holdings Co. advanced. Wen will announce a new stimulus package tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan, former Statistics Bureau head Li Deshui said today, without elaborating.
The Shanghai Composite Index jumped 6.1 percent, the biggest gain since Nov. 10, when it climbed 7.2 percent after the government announced its 4 trillion yuan plan. China’s rally helped send the MSCI Emerging Markets Index 2.2 percent higher.
BHP, Rio
Companies whose profits are most tied to economic growth led Europe’s advance, with gauges of basic-resource producers, construction shares and automakers climbing more than 4 percent.
BHP Billiton, the world’s largest mining company, added 6.6 percent to 1,106 pence in London. Rio Tinto Group, the third biggest, gained 8.7 percent to 1,760 pence. Xstrata Plc, the largest exporter of coal used by power plants, rallied 11 percent to 368.75 pence.
Copper futures advanced in Shanghai and London on optimism metals consumption in China may pick up as government stimulus packages take effect. Nickel gained 1.6 percent in London, climbing with aluminum, zinc and lead.
Alcoa, the largest U.S. aluminum producer, added 3.8 percent to $5.74 in New York pre-market trading.
Volkswagen climbed 4.3 percent to 199.17 euros, trimming its 2009 drop to 20 percent.
Vinci SA, the world’s largest construction company, surged 9.6 percent to 27.25 euros after reporting that full-year profit increased 9.4 percent, helped by its building division.
Standard Chartered
Standard Chartered Plc gained 8.5 percent to 683.5 pence. UBS raised its recommendation to “buy” from “neutral” following “robust” earnings reported yesterday.
France Telecom SA gained 2.1 percent to 17.78 euros after Europe’s third-largest phone company raised its full-year dividend to 1.40 euros a share from 1.30 euros paid for 2007. Annual gross operating profit, a measure comparable to earnings before interest, tax, depreciation and amortization, rose 2.8 percent to 19.4 billion euros ($24.3 billion). Analysts had predicted 19.1 billion euros.
Earnings for 244 companies in the Stoxx 600 that have reported earnings since Jan. 12 have dropped 91 percent, according to Bloomberg data. That compares to a 58 percent contraction in profit for the 465 companies that have reported results in the S&P 500 during the same period.
The MSCI World is valued at 10.4 times the earnings of its 1,680 companies, less than half this decade’s average ratio of 21.6, data compiled by Bloomberg show.
Zurich Financial, Metro
Zurich Financial gained 5.5 percent to 159.9 Swiss francs as the insurer was raised to “overweight” at JPMorgan.
“Zurich is now our top pick for three reasons: cost cutting, uplift to operating profit from reinsurance earnings, and strong non-life,” the bank wrote in a report.
Metro AG added 2 percent to 21.23 euros. Bank of America Corp. boosted its recommendation on Germany’s largest retailer to “buy,” saying concern over its operations in eastern Europe is “overdone.”
In Shanghai, Aluminum Corp. jumped 9 percent to 9.61 yuan and Jiangxi Copper Co. surged 10 percent to 16.73 yuan.
China’s Purchasing Manager’s Index, a manufacturing gauge, climbed for a third month. Output and new orders expanded for the first time in five months, signaling that government stimulus is taking effect. A recovery in the first half is “very likely,” central bank Vice Governor Su Ning said yesterday.
Bank of Japan
Seven & I Holdings, Japan’s largest retailer, climbed 2.9 percent to 2,100 yen in Tokyo. Bank of Japan board member Miyako Suda said today the central bank should signal that it’s prepared to take “bold” measures to counter the recession. Japan’s lower house of parliament approved a bill that will free up about 5 trillion yen ($50 billion) for economic stimulus.
Holcim Ltd. slid 2.2 percent to 34.92 Swiss francs. The world’s second-biggest cement maker said fourth-quarter profit fell 54 percent as it booked 300 million francs ($254 million) in costs to close factories as it combats slumping demand.
Adecco SA slumped 8.3 percent to 31.06 francs. The world’s largest supplier of temporary workers reported a fourth-quarter loss as it wrote down the value of goodwill on its Tuja acquisition in Germany and assets in the U.K.
