BLBG:Stocks Rise as Commodities Rally on U.S. Budget Optimism
Stocks climbed to a three-week high and commodities advanced on optimism U.S. lawmakers will reach an agreement in budget talks. Spanish and Italian 10-year yields fell as a measure of bank creditworthiness approached the highest level since July 2011.
The MSCI All-Country World Index (MXWD) rose 0.6 percent at 6:20 a.m. in New York and Standard & Poor’s 500 Index futures added 0.6 percent. The S&P GSCI gauge of 24 raw materials snapped a three-day slump. Spain’s yield slid to an eight-month low. The Markit iTraxx Financial index of credit-default swaps tied to banks and insurers lost six basis points to 158. The euro gained 0.3 percent to $1.2987 while the Australian dollar slid versus all its major peers.
The world economy is at its healthiest in 18 months as the U.S. seeks to avoid the tax increases and spending cuts known as the fiscal cliff, according to the Bloomberg Global Poll of investors. Treasury Secretary Timothy F. Geithner meets congressional leaders today after Republican House Speaker John Boehner said he is optimistic officials can “avert this crisis sooner rather than later.” Data today will probably show the U.S. economy expanded faster than previously estimated in the third quarter and jobless claims declined.
“Market expectations are that the U.S. cutbacks will be watered down and spread over several years,” said Matthew Sherwood, head of markets research in Sydney at Perpetual Investment which manages about $25 billion. “If the cliff is successfully flattened out over several years, the U.S. recession feared by markets is unlikely to occur.”
Invensys Jumps
The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent as more than eight shares advanced for every one that declined. Invensys Plc jumped 9.8 percent, extending yesterday’s 27 percent gain for the biggest two-day jump on record. The U.K. engineering company may be broken up as a sale of its rail-signaling division to Siemens AG for 1.74 billion pounds ($2.78 billion) helps it reduce pension liabilities.
Banco Popular Espanol SA advanced 2.2 percent. The Spanish bank completed a 2.5 billion-euro ($3.24 billion) share sale to help cover a capital shortfall. Electricite de France SA fell 3.4 percent to a record low after the country’s highest court, the Conseil D’Etat, ruled that the utility overcharged households.
The gain in S&P 500 futures indicated the U.S. gauge will climb for a second day. U.S. gross domestic product grew 2.8 percent in the third quarter, according to the median of 82 estimates in Bloomberg survey of economists, up from an initial projection of 2 percent. Separate figures will show initial claims for jobless insurance declined and pending home sales increased, based on Bloomberg surveys.
Global Economy
Two-thirds of the 862 respondents surveyed by Bloomberg described the global economy as either stable or improving. That’s up from just over half who said that in September and is the most since May 2011. The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year.
The yield on the Spanish bonds fell as much as 13 basis points to 5.20 percent, the lowest since March 20. Italy’s 10- year bond yield fell six basis points to 4.53 percent after the government sold 6 billion euros ($7.8 billion) of debt due 2017 and 2022. Austrian and Belgian 10-year yields sank to record lows.
The rate on Japan’s 10-year government bonds slumped to a nine-year low as the main opposition leader Shinzo Abe called for unlimited monetary policy easing by the central bank until inflation reaches 2 percent. Japan’s 10-year rate declined 1/2 basis point today to 0.71 percent, the least since 2003.
Aussie Weakens
Australia’s dollar declined 0.1 percent to $1.0462 after a report showed the nation’s business investment grew at a slower pace in the third quarter. Sweden’s krona strengthened against all but one of its major peers after a report showed gross domestic product increased 0.5 percent in the third quarter, exceeding economist estimates for a 0.2 percent expansion.
The S&P GSCI gauge climbed 0.9 percent. Aluminum rose 2.3 percent, copper advanced 0.9 percent and oil jumped 1.3 percent to $87.60 a barrel. Benchmark 2013 power prices in Germany and France dropped to the lowest level ever. The German contract tumbled to 46 euros a megawatt-hour, while the French futures declined to 48.55 euros amid increased output from renewables and lower coal prices.
The MSCI Emerging Markets Index (MXEF) added 1.1 percent, the most in a week. India’s Sensex rallied 1.8 percent after Goldman Sachs Group Inc. recommended buying the country’s stocks. The Hang Seng China Enterprises Index of mainland companies rose 0.9 percent, Russia’s Micex gained 0.6 percent. Benchmark gauges advanced more than 1 percent in South Korea, South Africa, Hungary and the Czech Republic.
Gold Fields Ltd. jumped 7 percent, leading South African shares to the biggest advance in almost two weeks on the mining company’s plans to spin off some local operations.
OAO MegaFon (MFON), Russia’s second-largest mobile-phone provider, climbed 3 percent in London after MSCI Inc. said its depositary receipts qualify for inclusion the index provider’s gauge for Russia. The shares climbed above their initial public offering price in the second day of trading after the company raised $1.7 billion in Russia’s biggest IPO in three years.
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: Justin Carrigan at jcarrigan@bloomberg.net
