Stocks Advance as Debt Concern Eases; Treasuries Decline
Asia Stocks Fall as Yen Reaches 15-Year High
Tomohiro Ohsumi/Bloomberg
Nomura Holdings Inc. cut sales and profit forecasts for Japanese companies because of the stronger yen.
Nomura Holdings Inc. cut sales and profit forecasts for Japanese companies because of the stronger yen. Photographer: Tomohiro Ohsumi/Bloomberg
Sept. 8 (Bloomberg) -- Binky Chadha, chief U.S. equity strategist at Deutsche Bank AG, talks about the implications of the November U.S. congressional elections for stocks. Chadha speaks with Margaret Brennan on Bloomberg Television’s "InBusiness." (Source: Bloomberg)
Sept. 8 (Bloomberg) -- Peter Kurz, head of Taiwan research at Citigroup Inc., talks about the prospects for new listings of overseas and Taiwanese companies on the island. Yangzijiang Shipbuilding Holdings Ltd., the first Chinese-owned company to sell shares in Taiwan, rose on the first day of trading for its depositary receipts on the island’s stock exchange. Kurz speaks with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)
Sept. 7 (Bloomberg) -- Matthew McLennan, a portfolio manager at First Eagle Funds, talks about First Eagle's investment strategy and holdings in bicycle component maker Shimano Inc. and industrial robot-maker Fanuc Ltd. He speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Stocks climbed, rebounding from yesterday’s slide, while Treasuries and the dollar declined as improved demand for Portuguese and Polish bonds tempered speculation Europe’s debt crisis will trigger another recession.
The Standard & Poor’s 500 Index gained 0.6 percent to 1,098.87 at 4 p.m. in New York. The premium demanded to hold Portuguese 10-year bonds instead of benchmark German bunds was 350 basis points after reaching a record 372 points yesterday. Two-year Treasury yields rose 4 basis points to 0.52 percent, gold fell from near a record and the dollar weakened against 14 of 16 major peers as investors pursued riskier assets.
Concern that European governments will struggle to fund deficits diminished as Portugal’s sale of bonds due in 2021 attracted bids for 2.6 times the amount offered, compared with 1.6 times in a March sale. Poland’s auction of five-year debt attracted the strongest demand since 2008. U.S. Treasuries slipped as investors bet that two-year yields near a record low aren’t justified given the reduced risk of another recession.
“This is a market dominated by short-term concerns,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “It’s not a long- term, logical, fundamental market. We’re seeing a knee-jerk reaction after yesterday’s selloff. The talk of a double dip recession in 2010 is a little bit like Hurricane Earl -- none of that actually showed Earl hitting land, but you never know.”
Costco, Staples Rally
The S&P 500 recovered about half of yesterday’s 1.2 percent drop, which was triggered by concern European banks will require more capital to absorb losses from government debt. Costco Wholesale Corp. and Staples Inc. advanced after Goldman Sachs Group Inc. advised buying the retailers’ shares. Apple Inc. rallied 2 percent as UBS AG raised profit and share-price estimates.
Alcoa Inc., JPMorgan Chase & Co, Boeing Co. and General Electric Co. rose at least 1.6 percent to lead gains in 23 of 30 Dow Jones Industrial Average stocks. Financial shares rallied 1.1 percent, the most among 10 industries in the S&P 500.
Global regulators reached a compromise that will introduce higher capital requirements for banks over a five- to 10-year period starting in 2013, a German central bank official said. The Basel Committee on Banking Supervision drafted key points of the so-called Basel III reforms, Bundesbank Vice President Franz-Christoph Zeitler told reporters in Frankfurt.
The proposal will be the basis for the Sept. 12 meeting of the Group of Governors of Central Banks and Heads of Banking Supervision Authorities who will decide on the reform framework. Group of 20 leaders meet in November to approve the rules.
Beige Book
The Federal Reserve said the U.S. economy maintained its expansion while showing “widespread signs of a deceleration” in mid-July through the end of August, according to a survey by 12 regional Fed banks.
Five regional banks reported “economic growth at a moderate pace” and two pointed to “positive developments or net improvements.” The remaining five banks said conditions were mixed or decelerating. President Barack Obama said in speech in Ohio today that the economic recovery has been “painfully slow,” and he called on Congress to enact measures to cut taxes for businesses and middle-income Americans.
Three stocks rose for each that fell in Europe’s Stoxx 600. BP Plc jumped 1.3 percent after its credit ratings were raised by Fitch Ratings to reflect an end to the threat of leaks from the Macondo well in the Gulf of Mexico. BP today released its internal investigation of the causes of the oil spill, faulting its own engineers for the fatal drilling-rig blast that triggered a record U.S. oil spill and said contractors Transocean Ltd. and Halliburton Co. share the blame.
German Exports
Germany’s DAX Index rose 0.8 percent even after the nation’s exports slumped 1.5 percent in July, the first drop in three months, the government said.
Benchmark 10-year Treasury notes pared losses as the U.S. government’s $21 billion auction of the securities attracted the highest level of participation in a year from a group including foreign central banks. The 10-year yield climbed 6 basis points to 2.65 percent after increasing 8 basis points earlier.
Portuguese bonds pared earlier declines, with the yield on the 10-year note little changed at 5.79 percent after the sale of about 1.04 billion euros ($1.32 billion) of 2013 and 2021 debt today.
‘Some Relief’
“Today’s news flow on debt sales in Europe is giving some relief,” said Roberto Campani, senior portfolio manager at Pioneer Investments in Dublin, which manages the equivalent of $236 billion. “We are in a situation where the swinging from risk-on to risk-off is a bit too quick as skepticism over a self-sustainable economic recovery and concern over a double-dip in western markets persist.”
Irish bonds rose relative to benchmark German bunds after the nation’s government said it plans to split Anglo Irish Bank Corp Ltd. into two parts. The advance narrowed the so-called yield spread with bunds to 371 basis points after it widened to a record 377 basis points earlier.
Gold futures retreated from near a record, with the December contract slipping 0.1 percent to $1,257.50 an ounce. October crude oil advanced 0.8 percent to $74.67 a barrel on the New York Mercantile Exchange.
The MSCI Emerging Markets Index slipped 0.2 percent. China Mobile Ltd. retreated 3.8 percent, its biggest decline since August 2009, after Vodafone Group Plc said it’s selling its 3.2 percent stake in the company.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net.
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