Stocks, Metals Rally on Manufacturing Growth

Stocks, Metals Rally on Manufacturing Growth; Treasuries Drop

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By Rita Nazareth and Stuart Wallace

April 1 (Bloomberg) -- Stocks rallied, driving the MSCI World Index to an 18-month high, commodities jumped and Treasuries fell as reports showed global manufacturing is strengthening. Treasuries fell.

The MSCI gauge of stocks in 23 developed nations climbed 1 percent at 11:49 a.m. in New York and the Standard & Poor’s 500 Index advanced 0.8 percent, with both surpassing their highest closing levels since September 2008. Copper, platinum and oil climbed to at least 17-month highs. The Swiss franc strengthened to a record against the euro and currencies of commodity producing nations rallied, with the Canadian dollar and Brazilian real gaining at least 0.7 percent versus the dollar.

The Institute for Supply Management’s index of U.S. manufacturing topped economists’ estimates, while reports in Brazil, China and Japan also boosted confidence that output will continue to rebound. An index of U.K. manufacturing climbed to its highest point since 1994, and European factory production increased at a faster pace than initially estimated in March.

“Manufacturing numbers are pretty strong,” said Philip Dow, the Minneapolis-based director of equity strategy at RBC Wealth, which oversees $164 billion. “You’ve got profound operational leverage and costs are pretty low. If you have any kind of resilience in the sales line, you’re going to see better-than- expected corporate earnings. It seems that the end of the world has been averted.”

Jobs Report

The S&P 500 erased yesterday’s drop as the average number of U.S. jobless claims over the past month fell to the lowest level since 2008, boosting optimism the labor market is improving. Tomorrow, when many global markets are closed for holidays, the government will report March payrolls. The median of economists’ forecasts in a Bloomberg survey is for an increase of 184,000, the biggest in three years.

Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. led producers of energy and raw materials to the biggest gains in the S&P 500 as all 10 industry groups advanced.

Primerica Inc., the insurer that Sanford I. “Sandy” Weill used to build Citigroup Inc., jumped as much as 30 percent in its first day of trading after convincing buyers to pay more than the forecast price range for its shares in a $320 million initial public offering.

Mortgage Bond Yields

Yields on Fannie Mae and Freddie Mac mortgage securities rose to the highest since the end of last year, after the conclusion yesterday of the Federal Reserve’s unprecedented purchase of the debt.

Yields on Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds climbed 0.03 percentage point to 4.55 percent, according to data compiled by Bloomberg. The move tracked an advance in yields on benchmark government notes. The difference between yields on the Fannie Mae securities and 10-year Treasuries widened for a third day, rising about 0.01 percentage point to 0.69 percentage point. The 10-year Treasury yield increased 4 basis points to 3.86 percent.

The Stoxx Europe 600 advanced as BHP Billiton Ltd., the world’s largest mining company, gained 1.6 percent in London after metals climbed. Rio Tinto Group, the third-biggest mining company, rose 2.2 percent.

The MSCI Asia Pacific Index closed 0.9 percent higher. China’s Shanghai Composite Index advanced 1.2 percent. The nation’s Purchasing Managers’ Index rose to a seasonally adjusted 55.1 last month from 52 in February, according to Li & Fung Group. Japan’s Tankan index of sentiment among manufacturers rose to minus 14 in March from minus 25 in December.

Emerging Markets

The MSCI Emerging Markets Index rallied to the highest intraday level in almost three months. Brazil’s Bovespa equities index rallied to a 22-month high as industrial production grew more than estimated.

Romania’s BET Index jumped 2.1 percent, extending last quarter’s 30 percent rally. Stocks in the smallest developing markets, including Romania, Ukraine and Nigeria, beat their larger peers by the most in almost five years last quarter as the MSCI Frontier Markets Index added more than 10 percent.

Copper for delivery in May rose 0.7 percent to $3.5795 a pound in New York, aluminum, nickel and zinc also gained. Platinum for immediate delivery jumped 1.7 percent to $1,671.25 an ounce, and earlier touched $1,672.75. Crude oil for May delivery added 1.3 percent to $84.82 a barrel in New York.

“Robust economic growth among emerging economies has supported commodity prices,” said Tobias Merath, head of commodity research at Credit Suisse AG in Zurich. “Now the U.S. and Europe are getting increasingly important, as demand there has started to pick up.”

The Swiss franc strengthened to less than 1.42 per euro for the first time, after a report showed the nation’s manufacturing expanded at the fastest pace in more than three years in March.