BLBG:Stocks Rise With Bonds as Copper Advances Before Fed
Global stocks rose to a five-year high and government bonds advanced before the Federal Reserve’s policy announcement and after companies from Volkswagen AG and Eni SpA to Bharti Airtel Ltd. reported results that beat estimates. Copper climbed for a fifth day and crude fell.
The MSCI All-Country World Index advanced 0.3 percent to 400.9 at 6:42 a.m. in New York, extending this month’s gain to 4.9 percent. Standard & Poor’s 500 Index (SPX) futures rose 0.3 percent. German 10-year bunds rose for a seventh day, the longest winning streak in more than two years, and Treasury yields approached a three-month low. The cost of insuring European bank debt against losses fell to three-year low. Copper jumped 1 percent, extending the longest streak since July 24, while West Texas Intermediate oil dropped 0.6 percent.
The Fed will probably maintain its $85 billion in monthly bond purchases at a meeting ending today, according to a Bloomberg survey of economists. Volkswagen, Europe’s largest carmaker, said operating profit jumped 20 percent, and Bharti Airtel, India’s largest mobile-phone operator, reported sales that topped estimates. General Motors Co. and Visa Inc. are among U.S. firms releasing results.
“The continuation of the U.S. Fed stimulus is still getting built into stock prices,” Aneesh Srivastava, the chief investment officer at IDBI Federal Life Insurance Co. in Mumbai, said by phone. “The earnings trajectory, which has been good so far, is boosting investor sentiment.”
The Stoxx Europe 600 Index climbed 0.6 percent to the highest level since June 2008. Automakers led gains as VW jumped 4.4 percent. Eni (ENI), Italy’s biggest oil company, advanced 3.4 percent in Milan after reporting adjusted net income fell less than analysts anticipated.
Banks Rally
Barclays Plc, the U.K.’s second-largest bank by assets, rose 3 percent in London after third-quarter pretax profit matched estimates. The Markit iTraxx Senior Financial Index of credit-default swaps linked to 25 European banks and insurers dropped two basis points to 116 basis points, the lowest since Oct. 13, 2010.
In Asia, China Citic Bank Corp. advanced 4.9 percent in Hong Kong after reporting higher earnings, and Daiwa Securities Group Inc. (8601), which posted an increase in quarterly profit yesterday, added 3.8 percent in Tokyo.
The gain in S&P 500 futures indicated U.S. stocks will extend a four-day rally that has pushed the benchmark gauge to a record. Yelp Inc. (YELP), owner of a website that lets consumers review local businesses, sank 8.9 percent in early New York trading after reporting a wider-than-estimated loss.
Data from the ADP Research Institute at 8:15 a.m. New York time may show U.S. companies added 150,000 workers to payrolls in October, following a gain of 166,000 last month, according to the median forecast of 39 economists surveyed by Bloomberg.
Bubble Markets
The Fed will probably decide today to keep purchases of mortgage-backed securities at $40 billion and Treasury buying at $45 billion, according to another survey of economists. U.S. consumer price growth is estimated to have slowed to 1.2 percent from a year earlier, after rising 1.5 percent in August, another survey shows.
Earnings and Fed stimulus have helped extend the S&P 500’s advance to 24 percent in 2013, which would mark its best yearly rally in a decade. Of the 296 companies in the index to have released results so far this quarter, 75 percent beat analysts’ profit projections and 53 exceeded revenue forecasts, according to data compiled by Bloomberg.
It’s “imperative” that the Fed begin to taper its record stimulus as it is contributing to “bubble-like markets,” BlackRock Inc. Chief Executive Officer Laurence D. Fink, whose company is the world’s largest money manager with $4.1 trillion in assets, said during a panel discussion in Chicago yesterday.
The MSCI Emerging Markets Index rose for a third day, advancing 0.7 percent. The gauge advanced 5.7 percent in October, poised for its first back-to-back monthly gain since January. India’s S&P BSE Sensex Index headed toward a record close as Bharti Airtel jumped 5.5 percent, the most in more than a month.
Party Meeting
The Shanghai Composite Index climbed 1.5 percent, rebounding from a seven-week low, on speculation the government will introduce measures to boost economic growth at a Communist Party meeting and as the largest oil companies, PetroChina Co. and China Petroleum & Chemical Corp., reported higher profit.
All sovereign debt markets tracked by Bloomberg World Bond Indexes apart from Australia and New Zealand had positive returns in the past month.
Germany’s 10-year yield fell two basis points to 1.71 percent today, dropping for a seventh day in the longest run since Aug. 4, 2011. The rate on similar-maturity Spanish debt touched 4.02 percent, the least since May. 6.
Treasury 10-year note yields fell one basis point to 2.49 percent after touching a three-month low of 2.47 on Oct. 23.
The euro strengthened 0.1 percent to $1.3759 and was little changed at 98.26 yen. Norway’s krone strengthened after reports showed unemployment fell and retail sales increased.
WTI dropped to $97.52 a barrel after an industry report yesterday showed U.S. inventories rose last week to a four-month high. Copper advanced to $7,269 a metric ton. Gold advanced 0.4 percent to $1,350.79 an ounce. The S&P GSCI (SPGSCI) gauge of 24 commodities added 0.2 percent, trimming this month’s drop to 0.6 percent, a second monthly decline.
----With assistance from Adam Haigh in Sydney and Santanu Chakraborty in Mumbai, Claudia Carpenter, Paul Dobson, Andrew Rummer and Shelley Smith in London. Editors: Stephen Kirkland, Stuart Wallace
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
