Aangsunu's Blog

Stocks, Oil Rise on Economy; Yen Weakens, Bond Risk Declines

Posted by aangsunu on 8 July 2010

Source : Bloomberg.com
Stocks rose for a third day and oil gained after the International Monetary Fund increased its estimate for global economic growth. The yen weakened and confidence in European government debt improved.
The MSCI World Index advanced 0.6 percent at 10:56 a.m. in London. Standard & Poor’s 500 Index futures fell 0.3 percent after the U.S. gauge surged 3.1 percent yesterday. The yen depreciated against all 16 of its most-traded counterparts, while the Aussie and South Korea’s won strengthened. Oil jumped to a one-week high. Credit-default swaps to insure Greek bonds declined 18 basis points, according to CMA DataVision.
The world economy will expand 4.6 percent this year, the biggest jump since 2007, the IMF said, raising its outlook from 4.2 percent after a stronger-than-expected first half. European banks gained on speculation stress tests will show narrower losses than some analysts estimated. The MSCI gauge of stocks in 24 developed nations has lost 13 percent from this year’s high on April 15 on concern Europe’s debt crisis and China’s steps to cool its economy will derail a recovery.
“I doubt we’ll have another global recession,” said Masayuki Kubota, a fund manager at Tokyo-based Daiwa SB Investments Ltd., which oversees $51 billion. “People are very sensitive to economic data from the U.S. If something good comes out, market sentiment easily rebounds. I’m buying sectors which were sold on excessive pessimism.”
Banks Upgraded
The Stoxx Europe 600 Index advanced 1 percent as BNP Paribas SA led banks higher. Strategists at Credit Suisse Group AG raised their recommendation for lenders to “benchmark,” saying European sovereign-debt risk is overstated, the financial industry is undervalued and the European Union stress tests “may be a positive catalyst.” The European Central Bank and the Bank of England will probably keep interest rates on hold today, Bloomberg surveys of more than 50 economists show.
Crude for August delivery rose as much as 1.4 percent to $75.10 a barrel in electronic trading on the New York Mercantile Exchange after a report by the American Petroleum Institute showed the biggest weekly decline in U.S. oil inventories since September. Gold immediate delivery slipped less than 0.1 percent to $1,202.05 an ounce.
The IMF predicted growth of 2.6 percent this year in advanced economies, more than the 2.3 percent seen in April, while emerging market will expand 6.8 percent, up from 6.3 percent in April, according to revisions yesterday to its World Economic Outlook.
Asia, Emerging Markets
Asian stocks advanced, pushing the MSCI Asia Pacific Index 1.8 percent higher. NEC Corp. advanced 2.2 percent after saying it aims to double its share of the world’s supercomputer market in the next four years and AU Optronics Corp., Taiwan’s second- largest flat panel maker, gained 4.6 percent as sales rose. In Europe, A.P. Moeller-Maersk A/S climbed 3.5 percent as the world’s biggest container shipper raised its 2010 forecast.
The MSCI Emerging Markets Index jumped 1 percent, heading for the highest closing level in almost two weeks.
The decline in futures indicated the S&P 500 will pare some of yesterday’s advance. Stocks rallied the most in almost six weeks after a U.S. retail-trade group said sales were growing at the fastest pace since 2006. A report today may show initial jobless claims declined to 460,000 last week, according to a Bloomberg survey of 38 economists.
The yen depreciated 0.5 percent to 88.10 per dollar and weakened 0.6 percent to 111.53 against the euro. South Korea’s won strengthened the most in almost three weeks against the dollar, climbing 1.1 percent to 1,209.40, on speculation the country’s exporters will report earnings this month that exceed analyst estimates.
Australia Jobs Growth
The Australian dollar rose against all but one of its 16 most-traded counterparts, jumping 1 percent to 87.28 U.S. cents, after a report showed job growth in the nation exceeded forecasts in June, fueling speculation that the central bank will have to resume boosting interest rates.
Credit-default swaps tied to Spain’s sovereign bonds dropped 11 basis points to 235, Portugal declined 14.5 basis points to 277 and Italy lost 8.5 basis points to 165.5, CMA prices show.
The yield on the German two-year note rose one basis point to 0.69 percent, while the 10-year bund yield was little changed at 2.60 percent. The U.S. 10-year Treasury yield was at 2.98 percent, near the highest in more than a week, before the government sells a record-tying $12 billion of Treasury Inflation Protected Securities today and also announces the sizes of three-, 10- and 30-year bond auctions for next week.

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