London/New York: Treasuries fell after a private report showed the US employers added more workers, while stocks fluctuated near records. Emerging market equities climbed to a 13-month high and copper gained.
The Standard & Poor’s 500 Index fell less than 0.1% at 9:31 am in New York after the gauge closed at a record. The Dow Jones Industrial Average came within two points of 17,000 in intra-day trading on Tuesday. The Stoxx Europe 600 Index added 0.1%, and the MSCI Emerging Markets Index advanced 0.8%. The 10-year treasury yield rose three basis points to 2.60%. Copper climbed 0.8%.
US companies added 281,000 workers to their payrolls in June, figures from the ADP Research Institute showed on Wednesday, before the labour department’s monthly job’s report on Thursday. A gauge of global equities closed at an all-time high on Tuesday after data showed manufacturing activity expanding in countries from China to the UK and the US Federal Reserve chair Janet Yellen is set to speak at the International Monetary Fund (IMF) on Wednesday in Washington.
“The ADP data is very strong,” Jim McDonald, chief investment strategist at Chicago-based Northern Trust Corp., said by phone. His firm manages about $915 billion of assets. “It’s another sign that we’re regaining some momentum in the latter part of the year. People are probably not going to want to have big bets on ahead of the payroll number.”
Labour Market
Data from employment to housing is fuelling confidence that the world’s largest economy is rebounding after the worst contraction in gross domestic product (GDP) since 2009. The ADP data on Wednesday indicated staffing at companies climbed in June by the most since November 2012, a sign the US labour market is strengthening with demand.
A separate release at 10 am may show factory orders in the world’s biggest economy fell 0.3% in May, following a 0.7% gain in April, according to a Bloomberg survey.
Yellen said last month that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth. She emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.
“Markets are enjoying what might be the last element of very accommodative monetary policy from the Fed and other central banks,” Peter Dixon, a London-based global equities economist at Commerzbank AG, said by telephone. “There’s nothing immediately out there that’s going to derail the economic outlook.”
Record Levels
The S&P 500 rallied 0.8% to an all-time high on Tuesday, after capping a sixth straight quarterly advance, as the US equities extended a rebound from the sell-off that started with biotechnology and small-cap stocks about three months ago.
The Dow average climbed 0.8% to 16,956.07 on Tuesday, while the Dow Jones Transportation Average gained 0.7% to 8,261.70, the first time in almost a month that both indexes reached records on the same day, data compiled by Bloomberg show. The Russell 2000 Index of small companies touched an intra-day record.
“A little bit of that strong momentum from yesterday is slowing,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “I think we got a nice start to the third quarter here yesterday and it’s just a matter of the fact that after you have those huge days, people try and take some short term profit.”
Emerging Stocks
The MSCI gauge for developing nations climbed to 1,060.23, heading for the highest close since 9 May, 2013. India’s S&P BSE Sensex rose 1.3% and the Hang Seng China Enterprises Index of mainland shares listed in Hong Kong added 1.1% as trading resumed after a holiday. Russia’s Micex advanced 1.1%.
Dubai’s benchmark gauge jumped 7.9%, the most since September and gaining for a second day from the lowest close since 12 March.
Three shares gained for every two that declined in the Stoxx 600, with trading volumes 45% greater than the 30-day average, data compiled by Bloomberg show.
Distribuidora Internacional de Alimentacion SA rose 4.7% after the Spanish discount grocer agreed to buy the El Arbol supermarket chain.
Dufry AG jumped 3.8% after Goldman Sachs Group Inc. raised its rating for the Swiss duty-free retailer. Alcatel-Lucent climbed 4.8% after JPMorgan Chase & Co. upgraded shares of the French network-equipment maker.
Orange, Pound
Orange SA, the biggest French phone company, dropped 3.4% after saying it cannot participate in a consolidation of the nation’s telecommunications market. Iliad SA, a French mobile network operator, lost 3.3%, while Bouygues SA fell 3% and Altice SA slid 1.3%.
The pound appreciated 0.2% to 79.58 pence per euro, after reaching its strongest level since October 2012 amid a pickup in the UK construction. Markit Economics said its Purchasing Managers’ Index (PMI) increased to 62.6 from 60 in May. That’s the highest since February and compares with economists’ forecast in a Bloomberg News survey for a decline to 59.8.
Hong Kong’s de facto central bank stepped in for the first time since December 2012 to prevent the city’s currency from rising against the US dollar. The Hong Kong Monetary Authority said it bought $2.1 billion within the past 24 hours at HK$7.75 a dollar, the upper limit of a convertibility range that triggers intervention.
Currency Moves
The Aussie fell against its 16 major peers, declining 0.4% to 94.57 US cents after a drop in exports fuelled the biggest shortfall in international trade since January last year. The Aussie rose the most in two weeks on Tuesday as manufacturing gauges boosted prospects for shipments of raw materials from the country.
The rupiah weakened for a second day, sliding 0.4% per dollar. The presidential election next week is now too close to call, survey company Roy Morgan said on 30 June as it released a poll showing Joko Widodo’s lead over Prabowo Subianto had narrowed to four percentage points from 18 points in May.
The cost of credit-default swaps linked to Argentina government debt signalled there’s a 64% chance the nation will default within the next five years. It costs $3.4 million in advance and $500,000 a year to insure $10 million of debt for that time, according to data provider CMA.
Argentina’s CCC- credit rating was placed on creditwatch negative by S&P after the Latin American country missed a coupon payment on international debt on 30 June.
Commodity Prices
Yields on 10-year German debt was at 1.26%. Spain’s yield climbed nine basis points to 2.73% amid speculation the European Central Bank (ECB) won’t add stimulus on Thursday.
Cotton fell 0.5% to 73.05 cents a pound. A drop below 72.2 cents a pound would put prices at the lowest since November 2012. China, the world’s top consumer, has been auctioning supplies from state inventories and the US department of agriculture this week forecast the US farmers will increase plantings 9.2% this year.
Platinum rose as much as 0.7% to $1,519.38 an ounce, the highest price since 4 September.
Brent crude fell as much as 0.7% to $111.54 a barrel, the lowest since 12 June, as rebels in eastern Libya said two oil ports they have held for a year, including the country’s biggest, are free to reopen. Bloomberg
Cecile Vannucci, Claudia Carpenter, Paul Dobson, Michael Shanahan and Inyoung Hwang in London, Yoshiaki Nohara in Tokyo and Susanne Walker and Jacob Barach in New York also contributed to this story.
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