BLBG:Stocks, Commodities Gain on China Easing Bets
Stocks (MXWD) rallied and commodities rose for a third day on speculation that China may act to spur growth in the world’s second-biggest economy. U.S. index futures gained as Alcoa Inc.’s revenue beat analysts’ estimates.
The MSCI All-Country World Index (MXWD) added 0.7 percent at 9:50 a.m. in London and Standard & Poor’s 500 Index futures increased 0.7 percent. The Shanghai Composite Index (SHCOMP) jumped 2.7 percent for its biggest three-day advance in 15 months. The dollar weakened against higher-yielding currencies including the New Zealand and Australian dollars. The yield on the 10-year German bund gained three basis points. The S&P GSCI (SPGSCI) gauge of 24 commodities climbed 0.8 percent.
China’s import growth fell to a two-year low in December, government trade data showed today, underscoring an economic slowdown. International Monetary Fund Managing Director Christine Lagarde and German Chancellor Angela Merkel are scheduled to discuss Greece at a meeting today. Laszlo Birinyi, whose prediction the bull market would weather a five-month retreat came true in October, says U.S. stocks (MXWD) will keep climbing in 2012.
“Policy makers in Beijing are very much focused on downside risks,” said Andrew Pease, a Sydney-based senior investment strategist for the Asia-Pacific region at Russell Investment Group, which oversees $137.6 billion of assets. “It would be a reasonable expectation that there’s a lot of monetary easing to come in the first half of the year.”
The Stoxx Europe 600 Index advanced 1.2 percent as Bayerische Motoren Werke AG led automakers higher. Debenhams Plc, the U.K.’s second-largest department-store chain, rallied 9 percent after reporting holiday sales that beat analyst estimates. Larger rival Marks & Spencer Group Plc climbed 2.2 percent as revenue increased.
Profit Drops
Royal Philips Electronics NV (PHIA) sank 6.2 percent, the most since September. The world’s biggest maker of light bulbs said fourth-quarter profit dropped by about 45 percent, held back by sluggish demand for health-care equipment in Europe. Software AG, Germany’s second-largest software maker, plunged 20 percent for the biggest drop in almost a decade after earnings and sales missed analysts’ estimates.
The gain in S&P 500 futures indicated the U.S. equities gauge will rise for a second day. Alcoa climbed 2 percent in German trading after the biggest U.S. aluminum producer posted a fourth-quarter loss excluding restructuring costs of 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg. Sales rose 6 percent to $5.99 billion.
U.S. equities will advance at least 8 percent as improving corporate profits force bears to capitulate, according to Birinyi, who manages $400 million in Westport, Connecticut.
Emerging Markets
The MSCI Emerging Markets Index (MXEF) advanced 1.2 percent. The Shanghai Composite Index climbed 6.4 percent in three days. Benchmark gauges in India, Russia, South Korea and Taiwan climbed more than 1 percent.
Oil in New York jumped 1.1 percent to $102.46 a barrel, the first increase in four days, and copper advanced 1.2 percent. Imports of the metal by China, the world’s biggest buyer of copper, surged to a record. Aluminum climbed as much as 1.2 percent to $2,134 a ton, the highest since Dec. 7.
The dollar depreciated 0.7 percent against the so-called Aussie, and weakened 0.9 percent versus New Zealand’s currency. The euro appreciated 0.1 percent to $1.2780, rising for the second consecutive day.
The yield on the 10-year U.S. Treasury note increased two basis points to 1.98 percent. The government sells $32 billion of three-year notes, the first of three bond auctions this week totaling $66 billion.
The yield on the Dutch 10-year bond rose three basis points to 2.26 percent. The Netherlands sold 3.105 billion euros of 0.75 percent debt due April 2015 at an average yield of 0.853 percent in an auction today. Austrian (GAGB10YR) 10-year yields declined four basis points as the government plans to issue 1.32 billion euros of securities maturing in September 2016 and April 2022. Greece is scheduled to sell 1.25 billion euros of 182-day bills.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
