Stocks, Commodities Gain as Earnings, Data Boost Optimism
By Rita Nazareth and Gavin Serkin
April 14 (Bloomberg) -- Stocks and metals rallied and oil halted a five-day slide as better-than-estimated corporate earnings and U.S. retail sales fueled confidence in the global economic rebound. The Dollar Index fell to a four-week low.
The Standard & Poor’s 500 Index climbed the most in almost six weeks, rising 1.1 percent at 4 p.m. in New York. The MSCI Emerging Markets Index jumped 1.2 percent, led by a rally in Korea after Moody’s Investors Service raised the nation’s credit ratings. Nickel and zinc surged more 3 percent to lead industrial metals higher in London, while oil climbed to almost $86 a barrel. Treasury 10-year note yields advanced from near a three-week low, increasing five basis points to 3.86 percent.
JPMorgan Chase & Co., Intel Corp. and CSX Corp. posted earnings that topped analysts’ average estimates, while the government said U.S. retail sales climbed the most in four months in March and the Federal Reserve said the economy expanded across most of the nation. Korea reported its biggest drop in unemployment in a decade and economists predicted China will report its fastest growth in almost three years tomorrow.
“On the corporate front, we got good earnings reports from Intel and JPMorgan,” said Peter Jankovskis, who helps manage about $1.8 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. “We had pretty good retail sales and CPI numbers. They tell us that the economy is growing without a significant threat of inflation. That gives the Fed room to keep its low interest-rate policy.”
Fed Outlook
Fed Chairman Ben S. Bernanke said the U.S. expansion will remain moderate as the economy contends with weak construction spending and high unemployment. The central bank’s Beige Book regional business survey said economic activity increased somewhat in all Fed districts except St. Louis. While labor markets remained weak, some hiring was evident, the Fed said.
The S&P 500 climbed above 1,200 for the first time since September 2008, the month of Lehman Brothers Inc.’s bankruptcy. Intel and JPMorgan rallied at least 3.3 percent for two of the top four gains in the Dow Jones Industrial Average. Combined first-quarter profit for S&P 500 companies increased 30 percent from a year earlier, according to analyst estimates compiled by Bloomberg.
The Dollar Index, which gauges the currency against six major trading partners, dropped 0.4 percent to 80.206 for a fourth day of losses and its lowest level since March 17. The U.S. currency weakened against 12 of 16 major counterparts, losing more than 1 percent versus the Singapore dollar and South Korean won.
Emerging Markets
The MSCI Emerging Markets Index rose to the highest level since July 2008. Korea’s benchmark climbed to the highest since June of that year as Shinhan Financial Group Co., the country’s third-biggest financial company, climbed 3.1 percent for the biggest gain in two months. Russia’s Micex Index jumped 1.8 percent as government officials meet with bondholders today for the country’s first Eurobond sale since 1998.
Brazil’s Bovespa equities index climbed 0.3 percent as Vale SA and Fibria Celulose SA and gained.
The MSCI World Index of 23 developed nations’ stocks rallied 1 percent, the most in almost six weeks, and the MSCI Asia Pacific Index climbed 0.7 percent.
Samsung Electronics Co., the world’s biggest chipmaker after Intel, gained 2.1 percent in Seoul. Tokyo Electron Ltd. advanced 3.6 percent in Tokyo after the company said orders rose. DBS Group Holdings Ltd., Southeast Asia’s biggest bank, climbed 4.6 percent in Singapore.
European Stocks
The Stoxx Europe 600 Index advanced 0.7 percent to an 18- month high as basic-resources and technology shares rallied. Rio Tinto Group gained 2.1 percent in London. Infineon Technologies AG, Europe’s second-largest chipmaker, climbed 2.8 percent in Frankfurt. STMicroelectronics NV gained 2.7 percent in Paris. Allied Irish Banks Plc surged 7.9 percent in Dublin after Goldman Sachs Group Inc. recommended the shares.
Greek bonds fell, with the yield on the nation’s benchmark two-year note rising 56 basis points to 6.66 percent, after Pacific Investment Management Co. and BlackRock Inc. said it’s too early to buy the securities after the European Union brokered the nation’s 45 billion-euro ($61 billion) aid package.
The premium investors demand to hold Greek 10-year debt instead of benchmark German bunds widened 28 basis points to 394. The spread has fallen from 427 basis points on April 8, which was the widest since the euro’s inception in 1999.
Greece still faces the danger of a “death spiral” because the cost of borrowing in the euro region’s rescue package is too expensive, billionaire investor George Soros said.
‘Question of Solvency’
“While it’s better than what the market is currently willing to offer, it’s still rather high,” Soros said at an event in London late yesterday organized by the Economist magazine. “It is a question of solvency. If you start charging very high rates as the market does in anticipation of solvency then that pushes you into insolvency.”
National Bank of Greece SA, the nation’s biggest lender, led Greek stocks lower, slipping 4 percent in Athens as the benchmark ASE Index lost 1.4 percent.
Greece and Portugal led an increase in the cost of insuring against default on sovereign debt. The European Union said Portugal may need additional budget measures this year to meet its deficit target, fueling concern the Greek debt crisis may worsen. Swaps on Greece surged 56 basis points to 436 and Portugal jumped 28 to 183, according to CMA DataVision.
Oil Jumps
Crude oil futures jumped after the U.S. Energy Department reported an unexpected decline in inventories and gains in equities signaled demand may improve with the economy. Oil for May delivery rose 2.1 percent to $85.84 a barrel in New York.
Gold rose as the dollar’s slide enhanced the appeal of the metal as an alternative investment, and signs of a global economic recovery boosted demand for commodities. Gold for June delivery rallied 0.3 percent to $1,156.60 an ounce in New York. Spot Palladium surged to a two-year high.
Aluminum for delivery in three months rose 1.1 percent to $2,462 a metric ton on the London Metal Exchange, the highest since September 2008. Nickel advanced 3.5 percent to $26,395 a ton. Zinc, tin and copper also appreciated.
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