Global Stocks Rally as Growth Concerns Fade; Aussie, Copper Gain
A global equities rally gathered momentum in Asian trading and emerging-market currencies strengthened as economic data from the U.S. and Australia spurred risk-taking. Copper rose and gold fell.
Benchmark share gauges jumped more than 3 percent in China, Hong Kong and Japan, while the Stoxx Europe 600 Index climbed for a fifth day. Australia’s dollar rose for a third day and its bonds tumbled as economic growth beat estimates. Copper led gains in industrial metals, while oil fell for the first time this week after data showed U.S. stockpiles increased. Standard & Poor’s 500 Index futures were little changed, after earlier advancing as results of the so-called Super Tuesday U.S. presidential candidate contests came in.
“We are getting a bit of stability in markets,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors Ltd. in Sydney, which oversees about $115 billion. “Most of the panic is behind us. People are underestimating just how much ammunition central banks have. U.S. growth is slow but steady.”
American factory activity in February shrank less than forecast, data showed Tuesday, burnishing the outlook for the world’s largest economy as China loosens monetary policy to revive growth in the second-biggest. While global stocks are recovering from a four-month losing streak, elevated prices for haven assets including U.S. Treasuries, gold and the yen are a sign many investors have yet to be convinced that the rally will be sustained.
MSCI Inc.’s world equity index has gained almost 8 percent since sinking to a 2 1/2-year low in the middle of last month, spurred by oil’s rebound from the lowest price in more than decade. It’s still down about 5 percent for the year.
The Stoxx Europe 600 Index rose 0.8 percent as of 7:06 a.m. London time, headed for its highest close in a month. The MSCI Asia Pacific Index surged2.8 percent as benchmarks advanced across the region. Japan’s Topix jumped 3.8 percent, Hong Kong’s Hang Seng Index climbed 3.1 percent and the Shanghai Composite Index rallied 4.3 percent.
China Resources Beer (Holdings) Co. soared as much as 35 percent in Hong Kong after agreeing to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller Plc, for $1.6 billion. The deal will help smooth the way for Anheuser-Busch InBev NV’s takeover of SABMiller.
Futures on the S&P 500 Index rose as much as 0.3 percent, before erasing gains. Hillary Clinton dominated Democratic Party primary contests held on Tuesday, beating rival Bernie Sanders, and Donald Trumpboosted his chances of securing the Republican Party presidential nomination.
A surprise, strong showing for Sanders “would have upset markets” by reducing the likelihood of Clinton becoming the next president, Lim Say Boon, chief investment officer at DBS Bank Ltd. in Singapore, wrote in a report. The Super Tuesday results are being seen as “an outcome for continuity over the disruption threatened by Trump and Sanders,” he said.
The Aussie strengthened for a third day, climbing 0.6 percent versus the greenback. Australia’s commodity-dependent economy expanded 0.6 percent in the fourth quarter from the previous period, faster than the 0.4 percent growth forecast in a Bloomberg survey.
South Korea’s won rose 0.8 percent, making it the best performer among major currencies. Indonesia’s rupiah advanced for the 10th day in a row, the longest winning streak in six years. India’s rupee climbed for a fourth day, its best run of gains this year.
The yuan fell 0.05 percent in offshore trading after the People’s Bank of China cut its daily reference rate for the currency to a four-week low and Moody’s Investors Service downgraded the outlook on the nation’s credit rating. In Shanghai, the yuan gained 0.04 percent.
Australia’s 10-year bonds tumbled, pushing their yield 11 basis points higher to 2.46 percent. The rate on similar- maturity U.S. Treasuries increased one basis point to 1.84 percent, after surging nine basis points on Tuesday. Government bonds also retreated in the U.K., Germany and France.
Crude oil fell 1.3 percent to $33.97 a barrel, retreating from an eight-week high. U.S. inventories rose by 9.9 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is also forecast to show supplies expanded, keeping stockpiles at the highest level in more than eight decades.
“Any rally that we see will be subdued because of the large crude inventory,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We really need to see production cuts if we’re going to get any sustained gain in oil.”
Copper climbed 1.3 percent in London. Codelco, the world’s biggest producer of the metal, expects a global surplus will persist through next year and that recent price gains are unlikely to be sustained, Chairman Oscar Landerretche said in an interview. Glencore Plc Chief Executive Officer Ivan Glasenberg said Tuesday that he now sees commodity prices bottoming.
Gold for immediate delivery fell 0.4 percent to $1,227.40 an ounce. It’s still up 16 percent for the year and reached a 12-month high of $1,263.48 in February.
–With assistance from Ben Sharples.