BackUS stocks rise, follow China rally
Financial and technology shares led the S&P 500 higher by 1%
Premium
London/New York: US stocks climbed, following the biggest rally in Chinese shares in three months. Oil swung between gains and losses, as traders digested an agreement by the world’s two biggest oil producers to freeze output.
The Standard & Poor’s 500 Index rose a second trading day as US markets reopened after the presidents’ Day holiday. The Shanghai Composite Index rallied the most in three months after data showed Chinese banks issued a record amount of loans in January. Brent for April settlement swung between gains and losses after reaching $33.55 a barrel, as investors weighed whether a pledge by Saudi Arabia and Russia will succeed in tackling the global oil surplus. European stocks fell, while the yen strengthened. Treasuries declined with German bunds.
Concerns about everything from oil’s plunge, China’s growth to whether central-bank efforts are losing their potency have stoked volatility in financial markets this year. Crude’s more than 40% slide over the past year has restrained growth in oil-rich emerging countries and heightened sensitivity to any sign of willingness by Saudi Arabia, the de facto OPEC leader, to discuss coordinated production cuts. Additionally, volatility in Chinese markets has spurred investors to monitor whether the nation’s central bank will step up efforts to restore stability to the currency and economy.
“What we’re seeing here are the US markets trying to catch up with the rally that the rest of the world saw yesterday," said Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments. “Oil is still important, but I think the larger focus has now switched to financial stocks. People turned their focus on the impact of negative rates spreading around the world, and the impact that might have on banks’ profits."
Stocks
Financial and technology shares led the S&P 500 higher by 1% at 9:32 a.m. in New York. Data today showed manufacturing in the New York region declined at a slower pace this month, though it was worse than forecasts by economists surveyed by Bloomberg.
Among shares moving on corporate news, Freeport-McMoRan Inc. gained 6.3% after agreeing to sell an additional stake in one of its biggest mines to Sumitomo Metal Mining Co. for $1 billion.
“The consumer in the US remains strong," said OakBrook’s Jankovskis. “The bottom line is that the economy itself is reasonably healthy, but there are a lot of lingering concerns relative to the longer term impact of some of these central bank efforts to encourage growth elsewhere."
The Stoxx Europe 600 Index fell 0.5% after moving as much as 0.8% in both directions. It is more than 20% below its April high. Lenders fell after their biggest two-day surge since 2011, while energy stocks advanced.
Emerging markets
The Shanghai Composite Index rallied 3.3% after data showed the nation’s banks gave out a record amount of loans in January. The gauge has tumbled more than 40% from its June high, as concern deepened over China’s economic slowdown.
China’s lending data followed an expression of confidence in the economy from central bank Governor Zhou Xiaochuan over the weekend. China’s Premier Li Keqiang said on Monday that the nation will take decisive actions if needed amid recent global economic headwinds and falling equity markets, according to a Beijing News report carried on the central government website.
The MSCI Emerging Markets Index rose 0.6% in a second day of gains, with shares in Taiwan, South Korea and Dubai adding more than 1.4%.
Commodities
Brent for April settlement advanced as much as 6.5% before erasing the gains. West Texas Intermediate was little changed at $29.50 on the New York Mercantile Exchange.
More than a year since the Organization of Petroleum Exporting Countries decided not to cut production to boost prices, oil remains about 70% below its 2014 peak. Record global oil stockpiles continue to swell, potentially pushing prices below $20 a barrel before the rout is over, Goldman Sachs Group Inc. said last week.
“A freeze would not create an immediate U-turn but it creates a better foundation for the price recovery in the second half," Olivier Jakob, managing director of oil consultants Petromatrix GmbH, said in a note to clients before the meeting concluded.
Gold rose 0.4% in the spot market, rising for the first time in three days as demand for haven assets rebounded.
Currencies
The yen advanced against all 16 of its major peers, climbing most versus the South Korean won and New Zealand dollar. It gained 0.6% to 113.9 per dollar. The euro rose 0.2% to $1.1174.
South Korea’s won dropped 0.7% to a two-week low as the central bank’s decision to keep the benchmark interest rate at a record low failed to quell speculation about a rate cut. Russia’s ruble slipped 0.9%, while a gauge of emerging- market currencies lost 0.3%, halting two days of gains.
China’s yuan traded onshore and offshore slipped at least 0.2% after the central bank set the daily fixing against the dollar at 6.5130, compared with 6.5118 on Monday. The currency surged 1.3% on Monday as it caught up with declines in the greenback last week, when Chinese markets were shut for the Lunar New Year holidays.
Bonds
The yield on US 10-year notes rose two basis points to 1.77%, while the yield on similar maturity German bunds rose three basis points to 0.27%.
Spain’s 10-year yield rose for the first time in three days, climbing six basis points to 1.75%, and Italy’s increased two basis points to 1.62%. Bloomberg
--With assistance from Nao Sano, Emma O’Brien, Alan Soughley, Neil Denslow, Andrew Reierson, Sofia Horta e Costa, Stephen Kirkland, Roxana Zega, Ben Sharples and Dani Burger.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
