Stocks (MXAP) climbed to a one-week high and the euro strengthened amid speculation the global economic recovery will be sustained and before the European Central Bank prepares to give euro-region banks unlimited three-year loans.
The MSCI All Country World Index added 0.7 percent as of 8:04 a.m. inLondon, set for the highest close since Dec. 12. Standard & Poor’s 500 Index futures increased 0.5 percent, after the stock gauge rallied 3 percent yesterday. The euro climbed 0.3 percent and South Korea’s won jumped 1.1 percent. German 10- year bond yields rose three basis points to 1.98 percent. S&P’s GSCI Index of commodities advanced a third day, paced by oil.
U.S. data today may show sales of previously owned homes rose in November, after a report yesterday showed housing starts jumped to a 19-month high. The European Central Bank announces results of its first tranche of unlimited three-year loans, a day after Spain sold more than its maximum target of bills, driving borrowing costs lower. Asian shares rallied as Chinese Premier Wen Jiabao pledged support for exporters.
“What we’re seeing at the moment is a lot of hope around the cheap money auction in the day ahead from the ECB, so that’s led to a contraction in yields,” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., said in a Bloomberg Television interview. “With the better economic data coming out the U.S. and Europe, that’s also helped push up share markets around the world.”
Stocks Gain
The Stoxx Europe 600 Index gained 0.8 percent, extending yesterday’s 2 percent jump. A measure of banks on the regional gauge rose 1.5 percent, paced by Lloyds Banking Group Plc.
The MSCI Asia Pacific Index advanced 2.3 percent, bound for the biggest increase since Dec. 1. Taiwan’s Taiex index (TWSE) jumped 4.6 percent, the world’s best performer, after Vice Premier Sean Chen said yesterday the island will let the National Stabilization Fund buy stocks to support local markets when necessary.
The S&P 500 jumped yesterday by the most this month after Commerce Department figures showed housing starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the most since April 2010. Building permits, a proxy for future construction, also climbed to a more than one-year high.
Sales of previously owned homes in the U.S. probably rose to 5.05 million in November from 4.97 million the previous month, economists surveyed by Bloomberg predicted before today’s report.
“The U.S. is showing it’s fairly robust in terms of not being dragged down to the extent of European economies, but there remain significant structural impediments,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “There will be significant gains today. The question is, given we are coming into a holiday period, how sustainable those gains are going to be over the next week or so.”
Bond Yields Fall
The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, slipped 0.4 percent. The euro traded at $1.3122 and bought 102 yen from 101.89 yesterday. Italian and Spanish two-year rates have slipped more than one percentage point since ECB President Mario Draghi announced unprecedented loans on Dec. 8 as investors bet that banks will use the cash to buy government debt.
Economists forecast banks would seek 293 billion euros ($383 billion), according to the median of 14 estimates in a Bloomberg News survey. Results will be announced today and the loans will start tomorrow.
“There has to be some link between the fact that the sovereign supply that’s come onto the market recently has been so well received and what the ECB is doing here,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “We’ve got a little bit left in this euro rally. We’ll probably see more positive flows,” coming from the long-term refinancing operation, he said.
Won, Aussie
The won climbed to 1,149.25 per dollar, extending yesterday’s 1.1 percent increase. Finance Minister Bahk Jae Wan said today that South Korean markets have been stabilizing quickly after the death of North Korean leader Kim Jong Il. The Malaysian ringgit strengthened 0.5 percent to 3.164 versus the dollar before the release of data on consumer prices, while Australia’s currency rose 0.6 percent to $1.0144.
The yen traded at 77.73 against the dollar after the Bank of Japan left its asset-purchase program unchanged while lowering its assessment of the economy. The benchmark interest rate was held at a range of zero to 0.1 percent at the conclusion of a policy meeting today.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped four basis points to 210 basis points, Credit Agricole SA prices show. The index is on course for its biggest daily fall since Dec. 7 and is set for the lowest level since Dec. 13, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Oil, Rubber
Crude for February delivery rose as much as 1.2 percent to $98.44 a barrel in New York, following a 3.4 percent gain yesterday. The industry-funded American Petroleum Institute said crude inventories declined 4.57 million barrels last week. An Energy Department report today may show supplies fell 2.13 million barrels, according to a Bloomberg News survey.
Rubber futures in Tokyo jumped as much as 3.1 percent, the most since Dec. 1, to 279.7 yen a kilogram ($3,592 a metric ton). Palladium, used to make pollution-control devices in autos, gained for a second day, rising as much as 0.9 percent to $633.50 an ounce, the highest level in a week. Gold increased 0.8 percent to $1,629.10 an ounce.
(source: Bloomberg)
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21/12/2011 03:36:53 PM | 