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Business News/ Market / Stock-market-news/  US stocks rise with emerging-market assets as dollar weakens
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US stocks rise with emerging-market assets as dollar weakens

The dollar weakened as tepid manufacturing growth from China to Europe boosted the prospects for added stimulus in those regions

Photo: BloombergPremium
Photo: Bloomberg

Singapore/New York: US stocks rose with equities around the world, while the dollar weakened as tepid m growth from China to Europe boosted the prospects for added stimulus in those regions.

The Standard & Poor’s 500 Index added to its second monthly gain, while a rally in UK banks kept an index of European shares near a three-month high. The dollar slipped from a seven- month high versus the euro on speculation the Federal Reserve’s first rate increase in nearly a decade has been priced in. Ten- year Treasury notes rose, while copper led gains among commodities.

Global equities are getting a jump on what has been the strongest month for stocks since 1988, as investors prepare for the European Central Bank’s policy decision and US jobs data later this week. Data Tuesday showed a private reading on Chinese manufacturing unexpectedly advanced while factory growth in the euro area accelerated, though not by enough to alter perceptions on the prospect for added stimulus. Manufacturing in the US unexpectedly contracted in November.

“There’s a bit more tolerance for risk right now because indices are flat and managers have to show return somewhere — there’s only four weeks to go, and they’re not doing it buying bonds," Ron Anari, the Jersey City, New Jersey-based senior vice president of trading at ICAP Plc, said via phone. “The Fed is going to hike at some point and it might as well be now. The equity markets have got it pretty much absorbed."

Stocks

The S&P 500 climbed 0.7% at 10:50am in New York. The index is coming off a 0.1% gain in November, as signs of a strengthening US economy offset concerns of an imminent rate increase. The gauge has posted a December advance in six of the past seven years. Its up 1.7% in 2015, poised for the smallest gain in four years.

Elevated inventories led to cutbacks in orders and production, sending the Institute for Supply Management’s index below 50 as manufacturing contracted. The report showed factories believed their customers continued to have too many goods on hand, indicating it will take time for orders and production to stabilize.

The MSCI All-Country World Index is heading for its first annual loss since 2011, though equities have wrapped up the year with gains on all but five occasions since 1988, with December posting the biggest and most frequent increases of any month, data compiled by Bloomberg show.

The S&P/TSX Composite Index jumped 0.7% after Canada’s economy grew for the first time in three quarters with gains in automotive exports and consumer spending overtaking the damage from lower oil prices.

The Stoxx Europe 600 Index slipped 0.3% after reaching its highest level since 18 August. UK equities posted some of the biggest gains as banks rallied after all seven major lenders passed the Bank of England’s stress tests. Royal Bank of Scotland Group Plc, Barclays Plc and Lloyds Banking Group Plc gained more than 2.4%.

Emerging markets

The MSCI Emerging Markets Index rebounded from a two-week low, climbing 1.4%, as benchmark gauges rallied across Asia. Hong Kong’s Hang Seng China Enterprises Index advanced for the first time in seven days.

While China’s official purchasing managers index fell to the weakest level in more than three years, a private PMI released by Caixin Media and Markit Economics rose more than forecast. Activity in the services sector has shown more strength, as the government’s non-manufacturing PMI indicated expansion.

A gauge of developing-nation currencies rose for the first time in five days after closing on Monday within 0.03% of a record-low. India’s rupee strengthened as the nation’s central bank kept borrowing costs on hold Tuesday.

Turkey’s lira strengthened 0.7%, advancing for a second day, as a report showed manufacturing expanded in November.

Brazil’s real declined after Latin America’s largest economy contracted more than analysts forecast amid a political crisis and a spreading corruption scandal.

Currencies

The dollar declined versus all of its Group-of-10 peers as investors started to focus more on the prospects for the Fed to tighten policy at a gradual pace in 2016. The euro was supported by a growing sense that the ECB won’t be able to exceed the already dovish market expectations for additional stimulus.

The dollar weakened 0.6% to $1.06225 per euro, after gaining 0.7% in the previous four days. The greenback touched $1.0558 on Monday, its strongest level since 14 April.

Australia’s dollar climbed 1.2% to 73.15 US cents, the highest since 16 October, building on its November advance. The currency got a boost after the central bank kept interest rates unchanged.

Bonds

Treasuries 10-year note yields fell three basis points to 2.17%, as the weak manufacturing data underscored expectations that the Fed will raise rates only gradually after liftoff from near zero.

The world’s largest money manager says expectations that US inflation will stay low are “too sanguine," and it prefers government securities that protect against gains in consumer prices over regular Treasuries.

Banco Santander SA sold €1.25 billion of seven-year bonds to yield 1.394%, according to a person familiar with the matter.Heineken NV sold €460 million of nine-year notes to yield 1.623%, according to a separate person.

Commodities

Oil futures in New York fell 0.3% to $41.51 a barrel before this week’s meeting of the Organization of Petroleum Exporting Countries. Crude is coming off its biggest monthly decline since July and is almost 40% in the past year amid a persistent global supply glut. Brent futures lost 0.5% in London.

The weaker dollar helped gold advance a second day. Bullion for delivery in three months added 0.2% to $1,067.50 an ounce. Copper futures rose 1.4% to at $2.0770 a pound in New York. Bloomberg

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Published: 01 Dec 2015, 10:32 PM IST
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