BLBG:Stocks, Commodities Rise On Stimulus Bets; Dollar Rallies
Stocks rose and commodities climbed for a second day on speculation central banks will take steps to boost economies as Europe’s debt crisis saps growth. Spanish, Italian, U.K. and U.S. bonds advanced.
The MSCI All-Country World Index (MXWD) added 0.5 percent at 7:45 a.m. in New York, heading for a second weekly gain. Standard & Poor’s 500 Index futures increased 0.3 percent. The S&P GSCI Index of 24 raw materials jumped 0.6 percent, led by an 0.7 percent advance in crude oil. The yield on the Spanish 10-year bond dropped five basis points to 6.86 percent, with the similar-maturity Treasury yield falling two basis points. The yen strengthened against all 16 of its major peers.
Policy makers from the U.K. to Japan and Canada stepped up warnings about the threat to world financial markets should Europe fail to contain its debt crisis. Greek elections June 17 may determine whether the country upholds austerity measures attached to international aid and remains in the euro bloc. U.S. industrial output probably slowed and consumer confidence fell, economists said before reports today.
“Traders are increasingly confident that major central banks and governments have contingency plans in place to counteract any possible market turmoil,” Markus Huber, head of German sales trading at ETX Capital in London, said in an e- mailed note.
Emergency Aid
The Stoxx Europe 600 Index (SXXP) climbed 1 percent, with four shares advancing for every one that fell. Banks rebounded after the Bank of England said it will provide billions of pounds of emergency aid to U.K. lenders. Barclays Plc jumped 4.5 percent, Lloyds Banking Group Plc added 4.5 percent and Royal Bank of Scotland Group Plc surged 7.5 percent. The central bank will allow the lenders to swap assets for money they can loan to companies and households.
European Union leaders will press for new efforts to boost the 27-nation area’s economy and improve lending conditions, according to a draft document prepared for a June 28-29 summit in Brussels. Steps include introducing so-called project bonds, making better use of EU infrastructure funds and increasing the capital, and therefore lending power, of the European Investment Bank, according to the June 12 draft.
Carrefour SA (CA) increased 4.6 percent as Europe’s largest retailer agreed to sell a stake in its joint venture in Greece. Hennes & Mauritz AB (HMB) rose 1.8 percent after Europe’s second- biggest clothing retailer posted quarterly sales that beat analysts’ estimates. Telekom Austria AG gained 2 percent after America Movil SAB agreed to buy a 21 percent stake.
The increase in U.S. futures indicated the S&P 500 will extend yesterday’s 1.1 percent advance. The 30-year Treasury yield declined one basis point.
Industrial Output
A gauge of U.S. industrial production increased 0.1 percent in May, according to the median estimate in a survey of 79 economists by Bloomberg News, compared with a gain of 1.1 percent in April. A separate report may show the Thomson Reuters/University of Michigan preliminary index of sentiment fell this month from the highest level since October 2007, economists said.
Italy’s two-year note yield tumbled 15 basis points, with the 10-year yield 15 basis points lower. The similar-maturity U.K. gilt rate slid six basis points after the Bank of England activated a facility to “respond to actual or prospective market-wide stress.” Governor Mervyn King said yesterday that the case for more stimulus in the U.K. is growing.
The yield on the Greek bond due in February 2023 dropped 119 basis points to 27.36 percent, declining for the third day. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments dropped five basis points to 317, the lowest in a week.
Yen Rallies
The yen appreciated 0.7 percent against the dollar after the Bank of Japan refrained from expanding monetary stimulus. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, dropped 0.2 percent, falling for the fourth consecutive day.
Crude oil for July delivery added 62 cents to $84.53 a barrel in New York after the Organization of Petroleum Exporting Countries urged members to cut production that’s in excess of quotas. Copper for delivery in three months rose 0.7 percent. Natural gas advanced 0.4 percent, extending the 14 percent jump yesterday that was the most in almost three years.
The MSCI Emerging Markets Index (MXEF) rose 1 percent, poised for its biggest weekly advance in four months. The Hang Seng China Enterprises Index of mainland stocks jumped 2.4 percent. Benchmark gauges in India, Russia, the Czech Republic, Hungary, Taiwan and Thailand gained more than 1 percent.
Vietnam’s VN Index surged 1.8 percent after Deputy Prime Minister Nguyen Xuan Phuc said the government will accelerate spending and boost bank lending. South Korea’s Kospi index fell 0.7 percent as Samsung Electronics Co. dropped after production lines at its display unit were temporarily halted yesterday.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
