Manufacturing Sends Global Stocks Surging Most Since May
Stocks, Copper Rise, Treasuries Drop
Jin Lee/Bloomberg
A trader works on the floor of the New York Stock Exchange in New York.
A trader works on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
Sept. 1 (Bloomberg) -- John Silvia, chief economist at Wells Fargo Securities LLC, discusses the outlook for the U.S. labor market and economy. Employers in the U.S. cut 10,000 jobs in August, according to figures today from ADP Employer Services. The median estimate of 35 economists surveyed by Bloomberg News called for a gain of 15,000. Silvia talks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)
Sept. 1 (Bloomberg) -- Companies in the U.S. unexpectedly cut workers in August, data from a private report based on payrolls showed. Employment fell by 10,000, according to figures today from ADP Employer Services. Bloomberg's Betty Liu and Michael McKee report. (Source: Bloomberg)
Sept. 1 (Bloomberg) -- Eugen Weinberg, an analyst at Commerzbank AG, talks about the outlook for the gold market and investment strategy. Weinberg speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Sept. 1 (Bloomberg) -- James Bevan, chief investment officer at CCLA Investment Management, talks about the outlook for U.S. manufacturing data and the impact on his equities strategy. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Sept. 1 (Bloomberg) -- Manoj Ladwa, an equity strategist at ETX Capital Research, talks about the outlook for equity markets in September. He speaks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: Bloomberg)
Sept. 1 (Bloomberg) -- Robin Bew, chief economist at the Economist Intelligence Unit, talks about the outlook for China's economy. Manufacturing in China grew at a faster pace in August after the weakest performance since early 2009, signaling that the economy’s slowdown will be limited. Bew speaks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
Aug. 31 (Bloomberg) -- Barry Knapp, the chief U.S. equity strategist at Barclays Capital Inc., talks about the outlook for the U.S. stock market. Barry Knapp, speaking with Matt Miller, Carol Massar, Julie Hyman and Dominic Chu on Bloomberg Television's "Street Smart," also discusses Federal Reserve policy, investor sentiment and the U.S. economy. PTI Securities & Futures LP's Daniel Haugh also speaks. (Source: Bloomberg)
Global stocks surged the most since May, Treasuries tumbled and copper rallied as manufacturing in the U.S. and China grew faster than economists estimated, bolstering optimism in the economy. The dollar, yen and Swiss franc weakened.
The MSCI World Index rallied 2.9 percent at 4 p.m. in New York, its biggest gain since May 27, and the Standard & Poor’s 500 Index jumped 3 percent to 1,080.29. Ten-year Treasury yields rose 11 basis points to 2.58 percent. Copper and aluminum advanced more than 2.4 percent to pace gains in metals. The Australian dollar strengthened against all 16 major counterparts after the nation’s economic growth topped forecasts.
Equities rebounded from the biggest August plunge in nine years as the expansion in manufacturing tempered concern that the global economy will slow as governments withdraw stimulus measures. Some Federal Reserve policy makers saw greater risks to the recovery even as the central bank signaled it’s hesitant to undertake another round of debt purchases to boost growth, according to minutes of an August meeting released yesterday.
“It’s a combination of better industrial data out of China and the ISM data here in the United States,” said Mark Bronzo, an Irvington, New York-based fund manager at Security Global Investors, which oversees $21 billion. “People have become extremely negative and as a result the data was better than expected and you’re seeing a sharp snap back.”
Rebound From August Plunge
Indexes of industrial, energy and financial companies rose at least 3.6 percent for the top gains among 10 groups in the S&P 500. All 10 industries advanced at least 1.6 percent. The benchmark recouped more than half of its 4.7 percent retreat in August. Bank of America Corp., Caterpillar Inc. and General Electric Co. led an advance in all 30 Dow Jones Industrial Average stocks.
Equities extended gains after the Institute for Supply Management’s gauge of manufacturing unexpectedly rose to 56.3 in August from 55.5 a month earlier. Readings greater than 50 signal growth. Economists forecast the index would decline to 52.8, according to the median estimate in a Bloomberg survey.
“The data tips the scale away from a recessionary outcome,” Myles Zyblock, the Toronto-based chief institutional strategist at Royal Bank of Canada, wrote in a note to clients today. “The ISM release is also a first step in the right direction for adding portfolio risk.”
China’s purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, while Australia’s economy expanded 1.2 percent from the first quarter, according to government data released today.
Jobs Concern
U.S. equities rallied even after companies unexpectedly cut 10,000 jobs last month, according to figures today from ADP Employer Services. The median estimate of 35 economists surveyed by Bloomberg News called for a gain of 15,000. Economists on average forecast government data on Sept. 3 will show that private payrolls rose by 41,000 last month after a 71,000 July gain, while the unemployment rate increased to 9.6 percent.
The yield on the 30-year Treasury bond surged 13 basis points to 3.64 percent. The two-year yield rose 3 basis points to 0.5 percent. The yield on the benchmark German 10-year bund climbed 11 basis points to 2.22 percent.
A benchmark indicator of corporate credit risk in the U.S. fell for the first time this week. Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 5.5 basis points to a mid-price of 108.97 basis points, according to index administrator Markit Group Ltd.
European Stocks
The Stoxx Europe 600 Index rose 2.7 percent as almost 24 shares advanced for every one that fell. Mining companies Xstrata Plc and Rio Tinto Plc increased more than 6 percent. Vivendi SA, owner of the world’s largest record company, rallied 5 percent after raising its profit forecast. Vinci SA, the world’s biggest builder, jumped 4.8 percent as earnings beat estimates.
The MSCI Asia Pacific Index gained 1.3 percent and the MSCI Emerging Markets Index of 21 developing countries added 2 percent. Benchmark indexes in Australia, Japan, South Korea, India, South Africa, Indonesia and Egypt rose more than 1 percent.
“Asian growth is still much better than the rest of the world,” said Manpreet Gill, a Singapore-based strategist at Barclays Wealth, which has $229 billion in assets. “Investors still need to be selective when buying equities as the global economic picture still looks tentative.”
Franc, Australian Dollar
The Swiss franc depreciated 1 percent to 1.3 per euro. Higher-yielding currencies rose against the dollar and the yen, with the Australian dollar climbing 2.2 percent to 90.98 U.S. cents. The euro was 1 percent higher at $1.2811.
China’s manufacturing growth boosted raw materials prices, with the S&P GSCI Total Return index of 24 commodities rising 2 percent, the first increase this week and its largest in a month. Crude oil for October delivery surged 2.9 percent to $73.98 a barrel on the New York Mercantile Exchange.
Corn rose to the highest price since June 2009, touching $4.4725 a bushel in Chicago, as hot, dry weather last month in the Midwest increased the chances of yield loss in the U.S., the biggest producer and exporter.
Gold prices fell from a two-month high as the rebound in equities eroded demand for the precious metal as a store of value. Gold for December delivery slipped 0.3 percent to $1,246.30 an ounce. Wheat and sugar also rallied.
To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net; Kelly Bit in New York at kbit@bloomberg.net.
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