BLBG: Stocks Advance On Stimulus Speculation; Spain Bonds Fall
U.S. stocks rose, rebounding from yesterday’s drop, on speculation policy makers will do more stimulate the economy. Spanish bonds fell and Treasuries retreated.
The Standard & Poor’s 500 Index added 0.1 percent at 9:31 a.m. in New York and the Stoxx Europe 600 Index increased 0.3 percent. The yen weakened against all but two of its 16 major peers. Treasuries snapped a three-day gain. Spanish bonds fell, pushing 10-year yields toward the highest since November. The S&P GSCI gauge of 24 raw materials was little changed. Prices for French and German electricity fell to records.
Federal Reserve Bank of Chicago President Charles Evans said he would support more stimulus. Italy plans to auction at least 9.5 billion euros ($11.9 billion) of debt this week as yields climb for Europe’s most-indebted countries following Spain’s request for a bailout. Greece holds elections June 17 that may determine the country’s future in the euro.
“There is hope,” said Jerome Forneris, who helps manage $8.5 billion at Banque Martin Maurel in Marseille. “Until the Fed meets, investors will speculate. It’s a very important factor of support for U.S. and European stocks. It wouldn’t surprise me to see a strong announcement from the Fed to boost the U.S. economy.”
‘Twist Useful’
The S&P 500 rebounded following yesterday’s 1.3 percent retreat, its biggest decline in more than a week. The Fed is scheduled to meet next week and announce its rate decision on June 20.
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio.
The Stoxx 600 (SXXP) advanced even as three shares fell for every two that advanced in the regional index. Lafarge SA (LG) gained 1.8 percent as the world’s biggest cement maker said it plans to make cost savings of 1.3 billion euros by 2015.
Spain’s 10-year bond yield climbed for a third day, rising 19 basis points to 6.69 percent, near its highest level since November. The cost of insuring against a Spanish default also rose for a third day, with credit-default swaps on the nation increasing eight basis points to 603. The price jumped to a record 613.5 basis points on June 1.
Italy’s 10-year yield increased 12 basis points to 6.15 percent after reaching 6.2 percent, the highest since January. Germany’s 10-year bund yield climbed 10 basis points to 1.41 percent, with France’s yield rising 12 basis points to 2.68 percent.
Ratings at Risk
Fitch Ratings said nations face downgrades as policy makers fail to demonstrate they can end the euro-area’s debt crisis. Ratings in the currency bloc are under “strong downward pressure,” Fitch Managing Director Ed Parker said in Oslo today.
The European Financial Stability Facility plans to raise at least 1 billion euros through a sale of bonds due April 2037 as banks in Norway and Germany sell relatively safe covered bonds after yesterday’s surge in non-financial deals.
The yield on 10-year U.S. Treasuries climbed five basis points to 1.64 percent.
The yen slipped 0.2 percent against the dollar and 0.3 percent versus the euro after the International Monetary Fund said Japan’s currency was overvalued. The euro appreciated 0.1 percent to $1.2499. The New Zealand dollar strengthened against all 16 of its major peers.
Brent oil dropped for a fourth day, falling 0.2 percent to $97.76 a barrel as OPEC ministers gathered in Vienna for a meeting on June 14 to decide on output levels for the second half of the year. The European benchmark contract for German power slid as much as 0.4 percent to 47.75 euros a megawatt- hour, according to broker data compiled by Bloomberg. French electricity for 2013 declined 0.6 percent to 48.90 euros a megawatt-hour, the lowest since the contract began trading in September 2009.
The MSCI Emerging Markets Index (MXEF) fell 0.3 percent, after closing yesterday at the highest level since May 29. The Shanghai Composite Index, South Korea’s Kospi and Taiwan’s Taiex Index slid at least 0.7 percent. The ISE National 100 Index (XU100) advanced 1 percent as Tupras Turkiye Petrol Rafinerileri AS (TUPRS) jumped 1.6 percent after the U.S. said Turkey was among nations that would be exempt from sanctions for buying Iranian oil. Poland’s WIG20 Index and India’s Sensex Index climbed more than 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
