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Business Title: Stocks, Commodities Rally on Growth Outlook; Euro Gains June 10 (Bloomberg) -- Stocks and commodities rallied after economic reports from China, Japan and Australia showed accelerating growth, while the euro strengthened a third day and gold fell. Treasuries remained lower after a 30-year bond sale. The Standard & Poor’s 500 Index increased 2.1 percent to 1,077.62 at 1:38 p.m. in New York, while the MSCI Asia Pacific Index and the Stoxx Europe 600 Index rose more than 1 percent. The euro advanced 0.9 percent to near $1.21, while the New Zealand dollar strengthened versus all 16 of its most-traded peers and Australia’s dollar rose against all but the so-called kiwi. Oil climbed above $75 a barrel. Ten-year Treasury yields increased 11 basis points to 3.29 percent. The biggest rise in China exports in six years bolstered confidence the fastest-growing major economy will continue to fuel the global recovery. Japan expanded at an annualized 5 percent rate in the first quarter. Demand for riskier assets also was stoked as the European Central Bank raised its euro- region growth forecast and planned to extend offerings of cash and keep buying government bonds to fight the debt crisis. “China’s export numbers are looking better than expected and the European situation is beginning to stabilize so investors are less worried,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “Plus the sell-off yesterday didn’t make a lot of economic sense so that set us up for a pop today.” Yesterday’s Losses Erased The S&P 500 fell 0.6 percent yesterday as a late-day slide wiped out an early 1.5 percent rally. Today’s gains came even as more Americans than anticipated filed applications for unemployment benefits last week, a sign firings remain elevated. Initial jobless claims dropped by 3,000 to 456,000 in the week ended June 5, Labor Department figures showed. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. Caterpillar Inc., Chevron Corp. and American Express Co. climbed at least 2.8 percent to lead the Dow Jones Industrial Average back above 10,000 after closing below for four straight days. Goldman Sachs Group Inc. fell to the lowest in more than a year on reports that the Securities and Exchange Commission is probing the firm’s $2 billion Hudson Mezzanine collateralized debt obligation. BP Plc fell 6.7 percent 365.5 pence in London, a seven-year low, while its U.S. shares rallied 9.5 percent as JPMorgan Chase & Co. said the recent rout in the stock has overshot the potential damage from the Gulf of Mexico oil spill. The stock has tumbled 44 percent since the April 20 explosion at its Deepwater Horizon rig in the Gulf of Mexico, triggering the worst oil spill in U.S. history. Credit-default swaps insuring BP’s debt for five years surged to a record, according to CMA DataVision. European Markets Almost 10 shares rose for every one that fell on the Stoxx 600. Automakers and construction companies were the biggest gainers among 19 industry groups on the European benchmark index. Daimler AG rallied 3.1 percent in Frankfurt after forecasting Mercedes-Benz sales will advance at twice the rate of the overall market on demand from China. Lafarge SA, the world’s biggest cement maker, gained 5.1 percent in Paris after Citigroup Inc. recommended buying the shares. Asian stocks rose the most in a week. Commonwealth Bank of Australia gained 1.3 percent in Sydney. Dentsu Inc., Japan’s biggest advertising agency, rose 2.6 percent in Tokyo. Developing-nation shares climbed for a third day, with the MSCI Emerging Markets Index advancing 1.4 percent. Benchmark indexes in Brazil, India, Taiwan, and the Czech Republic jumped more than 1.5 percent. Australian employers added workers in May for a third straight month, the statistics bureau said in Sydney today. The number of people employed gained 26,900 from April, compared with the median estimate of 23 economists surveyed by Bloomberg News of a 20,000 increase. Euro Strengthens The euro’s gain against the dollar brought it to an almost one-week high and the shared currency strengthened 0.7 percent to 110.18 yen. The ECB forecast the currency region’s economy will expand around 1 percent in 2010 compared with a previous forecast of around 0.8 percent. It will grow about 1.2 percent in 2011, lower than an earlier projection of around 1.5 percent because of weaker domestic demand. The 16-nation euro will survive Europe’s debt crisis, the head of China’s national pension fund said, according to a report by Reuters. Dai Xianglong, chairman of the National Council for Social Security Fund, also said China faces the risk of losses on its currency reserves because of growing debt in the U.S., according to the report. ‘Liquidity Issues’ The ECB said it will continue buying state debt and pumping unlimited funds into the banking system as part of a strategy by European policy makers to stop the euro region from breaking apart. The euro extended its advance as Germany’s highest constitutional court rejected an attempt by a lawmaker to preliminarily block the nation from granting guarantees as part of its share in the euro-area rescue fund. “The ECB is addressing liquidity issues, there’s news that the German court has rejected efforts to block Germany from participating in the guarantees of the stabilization mechanism,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “There are some rumors that China may move on its currency and that may also be helping the euro trade higher.” The dollar weakened against 14 of its 16 most-traded peers and the Dollar Index, which tracks the currency against six major trading partners, lost 0.8 percent to 87.226. Gold Retreats Gold for immediate delivery dropped 1.1 percent to $1,219.85 an ounce, the third consecutive decline. Copper for delivery in three months rose 0.5 percent to $6,369 a metric ton on the London Metal Exchange. Crude oil for July delivery rose for a third day, adding 1.4 percent to $75.41 a barrel on the New York Mercantile Exchange. Treasuries fell after the U.S. sold $13 billion of 30-year bonds. Yields on U.S. debt increased before the auction, helping to boost demand. The 30-year bond declined more than 1 point after the sale on eased concern Europe’s sovereign-debt crisis would slow the worldwide recovery. Spanish bonds rose as the government auctioned three-year notes, with demand higher than at an auction of similar-maturity securities in April. The yield on the 10-year bond fell 10 basis points to 4.47 percent, with the extra yield investors demand to hold the securities instead of benchmark German bunds narrowing 14 basis points to 186. The yield on the 10-year bund was 4 basis points higher at 2.6 percent. Post Comment Private Reply Ignore Thread |
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