Global equity index rebounds from lowest close since July 2013 Treasuries drop with yen as demand for havens abates Share on Facebook Share on Twitter Perhaps the despondency in financial markets had gone too far. Stocks rallied around the world, commodities jumped and credit markets strengthened as Chinese growth exceeded the most pessimistic analyst forecasts. That curbed demand for havens, sending the yen and government bonds lower. “The slowdown in China is nowhere near as bad as markets feared, plus officials have the ability to intervene and stimulate growth if they really need to,� said Justin Urquhart Stewart, co-founder of Seven Investment Management in London. “It looks like the hangover from this awful start to the year is finally clearing and markets are starting to see sense.� The renewed optimism boosted the MSCI All-Country World Index from its lowest level since July 2013, and a gauge of emerging-market stocks climbed from a six-year low as the Shanghai Composite Index jumped on speculation of buying by state-linked funds. Copper advanced by the most in a month, crude oil climbed from the lowest since 2003, and the cost of insuring European investment-grade corporate debt halted its longest run of increases since 2012. The yen weakened the most in a month and yields on U.K. gilts and Treasury notes rose. While official figures on Tuesday showed Chinese growth slowed at the end of last year, the data weren’t as dire as some investors had predicted and left the door open for authorities to do more to support the nation’s transition to a consumer-led expansion. Even with the rebound, market sentiment may remain fragile, with a Bank of America Merrill Lynch gauge of volatility expectations for equities, bonds, currencies and commodities close to its highest level since October. MSCI’s global equities index climbed 0.7 percent as of 10:36 a.m. London time. The Stoxx Europe 600 Index added 1.9 percent and futures on the Standard & Poor’s 500 Index rose 1.5 percent. Growth in China’s industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product rose 6.8 percent in the fourth quarter from a year earlier. The full-year expansion of 6.9 percent, the least since 1990, was in line with the government’s target of about 7 percent, and higher than forecasts for as low as 6.5 percent in a Bloomberg survey of economists. In the U.K., consumer prices rose more than analysts estimated, and German investor confidence also beat the median forecast. Stocks European stocks snapped a three-day decline, rising for the first time since they entered a bear market last week. All 19 industry groups climbed, with commodity producers and energy companies leading gains. A gauge of miners rose 5.1 percent, heading for its biggest advance since Dec. 23, as Glencore Plc and Anglo American Plc rallied more than 9 percent. Rio Tinto Group climbed 4.5 percent after saying it will slow the pace of its supply expansion amid a market glut. Seadrill Ltd. was one of the biggest gainers among oil-and-gas companies, rising 4.7 percent, after it reached its lowest level since 2009 at the end of last week. Credit Agricole SA added 3.8 percent after confirming that it is exploring the sale of stakes in more than three dozen regional banks. Unilever added 2.8 percent after its quarterly revenue beat estimates. Contracts on the S&P 500 Index pointed to a higher opening in the U.S. after Monday’s holiday. The index slid 2.2 percent on Friday. Investors will look to quarterly financial reports, with Bank of America Corp., Morgan Stanley and Delta Airlines Inc. among those scheduled to post earnings Tuesday. Emerging Markets The MSCI Emerging Markets Index rose for the first time in four days, gaining 1.7 percent, the most in two months. Benchmarks in Russia and the Middle East climbed more than 2 percent. The Shanghai Composite Index jumped rallied 3.2 percent, the most since November, with Reorient Financial Markets Ltd. saying government-led funds may have entered to bolster the market. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong jumped 3 percent, rebounding from a 2011 low. Russia’s Micex climbed 2.9 percent as Brent crude rebounded. Gulf stocks rose, with the Bloomberg GCC 200 Index climbing 2.5 percent, the most since August. Currencies The yen dropped 0.5 percent to 117.92 per dollar as investors unwound demand for the currency as a haven from turmoil in China. It has strengthened 2 percent this month. South Africa’s rand led gains in the currencies of commodity producing nations, rising for first time in three days. It climbed 1.6 percent, leading a gauge of 20 emerging-market currencies 0.4 percent higher on Tuesday. Australia’s currency gained 1.1 percent. Russia’s ruble strengthened 1.3 percent to 78.31 against the dollar. Turkey’s lira gained 0.4 percent before a central bank meeting. Two-year note yields were little changed at 11.11 percent. Policy markers will keep interest rates unchanged, according to the median estimate in Bloomberg surveys of economists. The Hong Kong dollar slipped 0.1 percent to 7.8059 per dollar, the weakest since September 2011. The currency was near the mid-point of the HK$7.75-HK$7.85 trading range that’s existed for more than a decade. Commodities The Bloomberg Commodity Index rose 1.2 percent, after closing at the lowest level since at least 1991 on Friday. Brent crude climbed as much as 3.9 percent to $29.67 a barrel, paring its decline this year to 21 percent. The International Energy Agency, adviser to 28 advanced economies, said Tuesday that global oil markets could “drown in oversupply,� sending prices even lower as demand growth slows and Iran revives exports. Copper gained 1.4 percent as stock markets jumped in China, the world’s biggest metals consumer. Former Federal Reserve Chair Ben Bernanke said China was making “good progress� with financial reforms. Corn climbed to the highest in almost four weeks as drought threatened to hurt African crops. Bonds The U.S. 10-year note yield climbed three basis points to 2.06 percent amid speculation yields have gotten too low given the outlook for resilient U.S. growth. Yields on similar maturity German bunds rose to 0.55 percent. “There’s an unwinding of the flight to quality,� that’s pushing Treasuries down, said Kazuaki Oh’E, head of fixed income at CIBC World Markets Japan Inc. in Tokyo. “I’d like to sell at this level. The U.S. economy should be basically OK.� The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies declined for the first time in 10 days. The index dropped one basis points to 96 basis points. The Markit iTraxx Europe Crossover Index of default swaps on sub-investment grade corporate debt fell nine basis points to 379 basis points.

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