BLBG:Stocks Rise as Greece Approves Austerity Plan; Euro Strengthens, Oil Gains
Stocks advanced, rebounding from the biggest loss this year, and the euro strengthened while German bonds fell after Greek lawmakers approved austerity plans to secure rescue funds. Oil led commodities higher.
The MSCI All-Country World Index (MXWD) added 0.5 percent at 10:15 a.m. in London. Futures on the Standard & Poor’s 500 Index climbed 0.7 percent. The euro strengthened 0.5 percent to $1.3260, while the yen weakened against all 16 most-traded currencies. The yield on the benchmark 10-year bund jumped six basis points, with the 10-year Italian yield falling seven basis points. The S&P GSCI gauge of commodities rose 0.7 percent.
Passage of the austerity bill puts the spotlight on a meeting of euro-region finance ministers on Feb. 15 that must decide whether to approve the second aid package. Rioters protesting the measures battled police and set fire to buildings in downtown Athens. Japan’s economy contracted an annualized 2.3 percent in the fourth quarter, more than economists estimated, the Cabinet Office reported.
“Investors have a feeling Greece won’t default,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “The approval of the bill helped them to take a step toward confidence. There’s now an expectation the second-round aid will be approved.”
Cable & Wireless
The Stoxx Europe 600 Index rallied 0.7 percent as automakers, mining companies and banks advanced. Cable & Wireless Worldwide Plc surged 28 percent after Vodafone Group Plc, the world’s largest mobile-phone company, said it’s in early stages of evaluating a potential offer for the company.
The increase in S&P 500 futures indicated the U.S. gauge will climb for the fourth time in five days. The index trades for 13.9 times its companies’ reported earnings and has been stuck below its five-decade average valuation of 16.4 since May 2010, the longest stretch since a 13-year span beginning in 1973, data compiled by Bloomberg show.
More than 50 companies in the index are scheduled to report results in the coming week, data compiled by Bloomberg show, including Deere & Co. and Comcast Corp. Per-share profits have topped analyst estimates at 70 percent of the 331 companies that released results since Jan. 9, data compiled by Bloomberg show. Earnings-per-share have increased 3.9 percent for the group on 7 percent sales growth.
The 17-nation euro advanced 0.7 percent against the yen, with the Dollar Index, which tracks the U.S. currency against those of six trading partners, dropped 0.5 percent. The New Zealand dollar surged 1.3 percent against the greenback, while the Australian dollar advanced 0.9 percent.
Default Risk
The extra yield investors demand to hold Italian 10-year bonds instead of bunds fell 13 basis points to 357 basis points, or 3.53 percentage points. Italy sold 8.5 billion euros ($11 billion) of 365-day bills, priced to yield 2.23 percent, down from 2.735 percent last month. Germany auctions as much as 4 billion euros of six-month debt, with France issuing as much as 8.7 billion euros of bills maturing in 84, 175 and 357 days.
The cost of insuring against default on European government bonds fell for the first day in four. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments declined four basis points to 325.
The 10-year U.S. Treasury note declined, sending the yield three basis points higher to 2.02 percent.
Cotton jumped 1.7 percent and oil in New York climbed 1 percent to $99.64 a barrel. Natural gas declined 1.8 percent to $2.433 per million British thermal units.
Emerging Markets
The MSCI Emerging Markets Index (MXEF) added 0.6 percent, following a 1.8 percent slide on Feb. 10, the biggest drop since November. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong climbed 0.6 percent. Russia’s Micex Index (MICEX) jumped 1.4 percent as oil rose. Benchmark indexes gained at least 0.8 percent in South Africa and Turkey. The Czech PX Index (PX) jumped 2.3 percent in Prague as Erste Group Bank AG gained.
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
