BLBG: Stocks, S&P 500 Futures Rise With Pound as Ruble Weakens
Stocks rose with U.S. equity-index (BUSY) futures, oil gained for the first time in four days and Treasuries fell as Chinese factory gauges signaled expansion. The pound strengthened after a pickup in U.K. manufacturing, while the ruble weakened as Ukraine ended a cease-fire.
The Stoxx Europe 600 Index climbed 0.5 percent at 7:22 a.m. in New York, after its fourth quarterly gain. Standard & Poor’s 500 Index futures advanced 0.2 percent, following its sixth quarterly advance, the longest rally since 1998. The yield on 10-year Treasuries rose two basis points to 2.55 percent. Gilts fell and the pound rose to the strongest level against the dollar since 2008. The ruble declined 0.9 percent. West Texas Intermediate oil increased 0.4 percent and corn headed for the biggest two-day decline in a year.
China’s manufacturing expanded in June at the fastest pace this year, data showed today before a report that will probably indicate growth in U.S. factory output, according to economists surveyed by Bloomberg. Ukraine refused to extend a truce, vowing to retake the country’s easternmost regions as peace efforts faltered. Iraqi political leaders are set to gather today without agreeing on a prime minister as the U.S. sent more troops to Baghdad to protect American personnel.
“Economic indicators still suggest everything is in place for a recovery,” Dirk Thiels, head of investment management at KBC Asset Management NV, said by phone from Brussels. “The data in Europe, although not spectacular, is holding steady above the expansion level, and the U.S. looks like it’s going in the right direction. We managed to have quite a decent run in the first quarter and now people are waiting for the next catalyst. There could be a positive surprise from earnings.”
BNP Climbs
Three shares advanced for every two that declined in the Stoxx 600, with trading volumes 27 percent greater than the 30-day average, data compiled by Bloomberg show. The gauge rose 2.3 percent in the past three months.
Lenders and commodity producers in the Stoxx 600 led gains among 19 industry groups.
BNP Paribas SA (BNP) added 3.6 percent. France’s largest bank said a record $8.97 billion fine for breaking U.S. sanctions won’t derail its growth plans or force it to reduce its dividend.
Rio Tinto Group and BHP Billiton Ltd., the world’s two largest mining companies, gained more than 2 percent.
Bilfinger SE tumbled 16 percent after the German builder cut its full-year profit forecast. Kloeckner & Co SE, the German steel trader, fell 4.3 percent as Credit Suisse Group AG recommended selling shares of the German steel trader.
Yearly Performance
The S&P 500 climbed 1.9 percent in June for its fifth straight increase, closing at 1,960.23 in New York. The gauge has rallied 6.1 percent this year and is near the all-time closing high of 1,962.87 reached June 20. The index trades at 16.6 times the projected earnings of its members, close to its highest valuation in four years.
A report from the Institute for Supply Management at 10 a.m. New York time will probably show its manufacturing gauge increased to 55.9 in June from 55.4 the previous month, according to the median economist estimate. That would be the highest reading of 2014. In China, manufacturing expanded in June at the fastest pace this year.
The Chinese Purchasing Managers’ Index (CPMINDX) was at 51.0, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today, matching analysts’ median estimate and increasing from May’s 50.8. A similar index from HSBC Holdings and Markit rose to 50.7 from the previous month’s 49.4.
The MSCI Emerging Markets Index was little changed after climbing 5.6 percent in the second quarter, its best quarter since September 2012. Markets in Hong Kong were closed today and the Shanghai Composite Index added 0.1 percent.
Ukraine Cease-Fire
The ruble extended its two-day drop to 1.6 percent, the most on a closing basis since Feb. 19, amid growing concern over further sanctions. The Micex Index slipped 0.2 percent in Moscow. Ukraine’s hryvnia lost 0.6 percent and the benchmark equity gauge was little changed.
Ukrainian President Petro Poroshenko refused to extend the truce a second time, citing more than 100 violations by pro-Russian rebels, according to a statement on his website today. Sergei Naryshkin, speaker of Russia’s Duma, called for the cease-fire to be extended, Interfax news agency reported.
WTI oil advanced to $105.77 a barrel, after falling 1.1 percent the previous three sessions. China is the biggest energy consumer. Corn dropped 0.4 percent after falling 4.9 percent yesterday when the U.S. government said domestic stockpiles will be larger than forecast.
Pound Gains
The pound gained 0.2 percent to $1.7136 and 10-year gilt yields jumped four basis points to 2.71 percent. An industry index rose to 57.5 in June from 57 in May, Markit Economics said today. Economists forecast a decline to 56.8, based on the median estimate in a Bloomberg News survey.
The yen dropped against 14 of it 16 major counterparts, weakening 0.3 percent to 101.58 per dollar.
Treasuries rose in the first half of 2014 to almost erase last year’s losses as the U.S. economy contracted while conflict in Iraq and Ukraine fueled demand for the safest securities. The Bloomberg U.S. Treasury Bond Index climbed 3.2 percent this year through the end of last week, after declining 3.4 percent in 2013.
The cost of insuring against losses on corporate debt fell for the first time in five days. The Market iTraxx Europe index of credit-default swaps on 125 investment-grade companies declined one basis point to 61 basis points. The gauge declined for a third straight month in June.
(The time stamp in an earlier version of this story was corrected.)
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net Stephen Kirkland
