Stocks, Commodities Gain on Growth Outlook; Dollar, Yen Decline
Nov. 23 (Bloomberg) -- Stocks rose around the world,commodities advanced and the dollar and the yen fell as sales ofU.S. homes increased more than forecast and speculation grewthat central banks will keep interest rates near record lows.
The Standard & Poor’s 500 Index rallied 1.3 percent to1,105.42 at 12:30 p.m. in New York, near a 13-month high.Europe’s Dow Jones Stoxx 600 Index added 2 percent, poised forits best gain in six weeks. Oil climbed above $79 a barrel,copper rallied to a 14-month high and gold reached a record asthe Dollar Index fell for the first time in three days.
Sales of existing U.S. homes increased 10 percent inOctober to the highest level since February 2007, NationalAssociation of Realtors data showed today. Economic reports thisweek will show rising export orders in Taiwan and South Korea,according to Bloomberg News surveys of economists’ forecasts.
“What may be perceived as strength in commodities orequity prices can just as easily be seen as weakness in thevalue of the dollar,” said Kevin Caron, a market strategist inFlorham Park, New Jersey, at Stifel Nicolaus & Co., whichmanages about $98 billion in client assets. “What you’re seeingis an unprecedented array of government and taxpayer fundedefforts to revive the economy, and they’re doing it, in theUnited States of course, at the expense of the dollar.”
Global stocks and commodities also advanced on speculationU.S. policy makers will keep borrowing costs near record lowlevels. Charles Evans, president of the Federal Reserve Bank ofChicago, told the Financial Times that U.S. interest rates maystay near zero until “late 2010, perhaps later.”
‘Some Comfort’
Evans’s comment “is going to provide the market with somecomfort in the near term, allow asset markets and higher-riskmarkets to continue to move higher,” Ian Stannard, a foreign-exchange strategist in London at BNP Paribas SA, said today in aBloomberg Television interview. That “will keep the dollarunder pressure for the time being,” he said.
All 10 industry groups in the S&P 500 advanced at least 0.9percent, led by energy producers. Deere & Co. and SchlumbergerLtd. rallied more than 2.8 percent after analysts advised buyingthe shares. Chevron Corp., General Electric Co. and Exxon MobilCorp. climbed more than 2 percent to lead the Dow JonesIndustrial Average up 131.43 points, or 1.3 percent, to a 13-month high of 10,449.59.
The MSCI World Index of 23 developed nations added 1.8percent, its biggest gain in a week. BHP Billiton Ltd., theworld’s biggest mining company, and Rio Tinto Group rallied atleast 3.4 percent in London. Renault SA, Europe’s second-biggestautomaker, increased as much as 5 percent in Paris after CreditSuisse Group AG advised buying the shares.
Asia Advances
The MSCI Asia Pacific Index rose 0.7 percent. ChinaConstruction Bank Corp., the nation’s second-biggest lender,gained 4.1 percent in Hong Kong after Zhang Ping, chairman ofthe National Development and Reform Commission, said China willfavor “consistent, stable” policies on the economy. JamesHardie Industries NV, the top seller of home siding in the U.S.,surged 6.4 percent in Sydney after forecasting earnings at thetop end of its range.
Copper for March delivery rose 1.9 percent to $3.1945 apound in New York and climbed as high as $3.204. Nickel, zincand tin also gained.
Crude oil jumped 3.4 percent to $79.33 a barrel in New Yorkas a weaker dollar heightened the appeal of commodities andafter an Iranian military exercise bolstered concern that MiddleEastern supplies may be disturbed. Natural gas for Decemberdelivery rose 4.1 cents, or 0.9 percent, to $4.465 per millionBritish thermal units.
Commodities Gain
The S&P GSCI index of 24 raw materials advanced 1.8 percenttoday, extending its 2009 gain to 48 percent, poised for thebest performance for commodities since 1973. Gold futurestouched $1,174 an ounce as the slumping dollar boosted bullion’sappeal as an alternative asset.
The U.S. dollar and yen dropped versus major counterpartsas commodities and stocks advanced, spurring demand for riskierassets. The Dollar Index, which IntercontinentalExchange Inc.uses to track the greenback against the currencies of six majorU.S. trading partners, decreased 0.8 percent to 75.065. It slidto 74.679 on Nov. 16, the lowest level since August 2008.
South Africa’s rand was the biggest winner versus the yenand dollar among the major currencies tracked by Bloomberg asthe gain in commodities and stocks encouraged carry trades, inwhich investors buy higher-yielding assets with amounts borrowedin nations with low interest rates. The rand strengthened 2.1percent against the yen and 1.8 percent against the dollar.
Treasury Auctions
U.S. Treasuries were little changed as the governmentprepared to sell a record $118 billion of notes this week. Theyield on the 10-year note climbed one basis points to 3.38percent, according to BGCantor Market Data. The U.S. will sell$44 billion of two-year notes today, $42 billion of five-yearsecurities tomorrow and $32 billion of seven-year debt in twodays.
James Bullard, the St. Louis Fed president, said he favorsthe U.S. central bank seeking authority to continue buyingmortgage-backed bonds after the first quarter of next year tobolster bank liquidity. International Monetary Fund ManagingDirector Dominique Strauss-Kahn told a Confederation of BritishIndustry conference that “we don’t see a high probability of adouble dip,” in the global economy, though avoiding thatoutcome isn’t “a done deal.”
Emerging Markets
Developing-nation stocks rose, led by shares in Hungary andPoland, as the MSCI Emerging Markets Index climbed 1.3 percent,its biggest gain in a week. OTP Bank Nyrt., Hungary’s largestlender, rallied 4.7 percent after the central bank cut thebenchmark interest rate to the lowest in more than three years.The Czech koruna, Polish zloty and Hungarian forint all climbedat least 1 percent against the dollar.
Mexico’s Bolsa Index gained 0.7 percent, paring a rally ofas much as 1.9 percent after Fitch Ratings downgraded thenation’s foreign-currency rating to BBB from BBB+, saying therecession has “accentuated weakness” in the country’s fiscalprofile.
The Micex Index of stocks in Russia, the world’s biggestenergy-exporting economy, increased as much as 2.3 percent tothe highest value since Nov. 18 as oil prices climbed.
The Tel Aviv 25 Index climbed 1 percent even as the Bank ofIsrael unexpectedly raised the benchmark interest rate for asecond time since the global economy began to recover as growthaccelerated and inflation approached the top of the government’starget range.
The Dubai Financial Market General Index increased 1.6percent, the biggest gain in a week. The benchmark reboundedfrom a 2.6 percent decline yesterday after the emirate’s ruler,Sheikh Mohammed Bin RashidAl Maktoum, fired a senior aide andremoved three others.
Large-Caps Outperform
For the first time since the equity rally began in March,the biggest U.S. stocks are beating the smallest as the dollar’sdescent sends investors to companies with the most business ininternational markets.
The Dow Jones Industrial Average of companies with $111.4billion in median market value rose 6.2 percent this quarterthrough last week, compared with the 2.6 percent loss by theStandard & Poor’s SmallCap 600 Index, whose members are worth$572.3 million on average. The Dow had trailed by 26 percentagepoints following the stock market’s low on March 9.
A benchmark gauge of corporate credit risk in the U.S. fellfor the first time in three days as stocks gained.
Credit-default swaps on the Markit CDX North AmericaInvestment-Grade Index Series 13, which is linked to 125companies and used to speculate on creditworthiness or to hedgeagainst losses, fell 2.75 basis points to 100.25 basis points asof 10:51 a.m. in New York, according to broker Phoenix PartnersGroup. The swaps typically fall as investor confidence improves.
Borrowers have sold a record $1.171 trillion in U.S.corporate bonds in 2009, surpassing the amount sold in 2007,according to data compiled by Bloomberg.
Sales of investment-grade and high-yield, high-risk debtcompare with the more than $1.167 trillion that companies soldin all of 2007, a record year for corporate bond issuance,Bloomberg data show.
To contact the reporters on this story:Michael P. Regan in New York at mregan12@bloomberg.net;Stuart Wallace in London at swallace6@bloomberg.net
Last Updated: November 23, 2009 12:31 ESTSource: Bloomberg
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