Stocks Hit Two-Year Highs as Economic Data Spur Optimism; Treasuries Gain
Australia’s S&P/ASX 200 Index climbed 0.7 percent while the nation’s dollar rose against all 16 most actively traded counterparts. Photographer: Ian Waldie/Bloomberg
Dec. 9 (Bloomberg) -- Edward Yardeni, president and chief investment strategist at Yardeni Research Inc., discusses the U.S. bond market. Yardeni speaks from London with Erik Schatzker, Deirdre Bolton and Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Dec. 9 (Bloomberg) -- Michelle Clayman, chief investment officer at New Amsterdam Partners, discusses investment strategy. Clayman speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Dec. 8 (Bloomberg) -- Pablo Goldberg, global head of emerging market research at HSBC Holdings Plc, talks about his investment strategy for emerging markets. He speaks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: Bloomberg)
Stocks gained, driving U.S. and European benchmark indexes to two-year highs, after improving data on the American, Australian and Japanese economies. Treasuries rose, with the 10-year yield retreating from a six- month high, and the euro weakened.
The Standard & Poor’s 500 Index climbed 0.3 percent to 1,232.42 at 9:39 a.m. in New York and the Stoxx Europe 600 Index rose for a fourth day, gaining 0.4 percent. Crude oil erased gains after approaching $90 a barrel and rubber traded near a 30-year high. The Australian dollar strengthened against all 16 of its most-traded counterparts, while the euro declined against 14 of 16 after Ireland was downgraded by Fitch Ratings. Ten-year Treasury note yields dropped seven basis points to 3.21 percent.
U.S. and European benchmark stock gauges traded at their highest levels since September 2008 as investor optimism increased after Japan’s economy grew more than the government initially estimated and Australian employers added more than double the number of workers forecast by economists. First-time U.S. unemployment claims fell a more-than-forecast 17,000 to 421,000 last week and the four-week moving average dropped to the lowest level in more than two years.
“We’re seeing more clarity everywhere,” said Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., which oversees $3.45 trillion as the world’s largest asset manager. “It’s good to know that the labor market, which typically trails in a recovery, is gaining traction. The growth in Asian economies is also a positive,” he said. “It will probably be a fairly good environment for equities over the next 6 to 12 months.”
Jobless Claims
Gains in the S&P 500 were led by financial and energy companies, leading an advance in the index’s 10 main industry groups. Applications for jobless benefits decreased to 421,000, compared with the median forecast of economists surveyed by Bloomberg News for 425,000 new claims. Labor Department figures showed. The four-week moving average, a less-volatile measure, dropped to the lowest level in more than two years.
A Bloomberg poll showed the majority of Americans are dissatisfied with the Federal Reserve, saying the central bank should either be brought under tighter political control or abolished outright. The Bloomberg National Poll, conducted Dec. 4-7, underlined the extent to which the central bank’s standing has suffered as it has come under fire in Congress, first from Democrats for regulatory lapses before the financial crisis and then from Republicans for failing to revive an economy in which the jobless rate hovers near 10 percent.
Portugal, Spain Stocks
Portuguese and Spanish stock markets led European equities higher. Bank shares rallied, with BNP Paribas SA, France’s largest lender, jumping 3.3 percent and Barclays Plc climbing 4.3 percent. ASML Holding NV advanced 6.6 percent after raising its forecast for orders in the fourth quarter.
Gains were limited by automakers after Xiong Chuanlin, vice secretary-general of the China Automobile Industry Association, said in Beijing that the government may end tax incentives for car purchases next year. Volkswagen AG and Bayerische Motoren Werke AG fell more than 3 percent.
The MSCI Asia Pacific Index gained 0.7 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, rose 3.7 percent, while Westpac Banking Group Ltd., Australia’s second-largest bank by market value, climbed 2.4 percent.
The MSCI Emerging Markets Index of stocks advanced 0.5 percent, recovering from a 1.4 percent loss yesterday, as South Korea’s Kospi rose 1.7 percent. The Shanghai Composite Index declined 1.3 percent to the lowest level since Oct. 11 after the Chinese Academy of Social Sciences said property prices are inflated.
Euro Weakens
The euro depreciated 0.2 percent to $1.3233 and weakened 0.4 percent against the yen to 111.05. Fitch cut Ireland’s long- term rating to BBB+ from A+ today, reigniting concern about the euro region’s most indebted nations. The extra yield investors demand to hold Irish 10-year bonds instead of benchmark German bunds widened one basis points to 502.7 basis points.
The pound pared declines against the dollar, trading 0.3 percent lower at $1.5787 after slipping as much as 0.4 percent, after the Bank of England kept the U.K.’s main interest rate at a record-low 0.5 percent and its bond-purchase program at 200 billion pounds ($315 billion). Britain’s currency gained 0.2 percent to 83.78 pence per euro. Australia’s dollar strengthened 0.7 percent to 98.61 U.S. cents, snapping a three-day decline, and appreciated 0.5 percent to 82.75 yen.
Treasury Yields
The 30-year Treasury yield slipped three basis points to 4.43 percent before the government auctions $13 billion of the securities, the last of three sales this week totaling $66 billion. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose six basis points to 182, according to CMA.
Copper for delivery in three months rose as much as 0.8 percent to $9,091 a metric ton on the London Metal Exchange, leading gains in industrial metals. Oil advanced as much as 1.3 percent to $89.42 a barrel in New York, rebounding from two days of declines, before erasing gains to trade little changed.
Rubber futures traded on the Tokyo Commodity Exchange gained as much as 1.4 percent to 382.5 yen per kilogram ($4,558 a ton), the highest since Nov. 11, when the most active contract reached a 30-year high of 383 yen ($4.56). Rubber has risen 38 percent this year on prospects for a shortage after drought followed by heavy rains disrupted production.
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