Stocks, Euro Rise on Greek Aid Optimism; Colombia Peso Gains
Euro Rises on Optimism Over Greece Aid
Hannelore Foerster/Bloomberg
The euro appreciated against 15 of its 16 most-actively traded counterparts.
The euro appreciated against 15 of its 16 most-actively traded counterparts. Photographer: Hannelore Foerster/Bloomberg
May 31 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks advanced, trimming the biggest monthly drop since August for the Standard & Poor’s 500 Index, amid speculation about additional aid for Greece. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
May 31 (Bloomberg) -- Valentijn Van Nieuwenhuijzen, head of strategy and chief economist at ING Investment Management, talks about the prospect of further loans for Greece from the European Union, European Central Bank and the International Monetary Fund. He speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)
May 31 (Bloomberg) -- David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc., talks about investment strategy for U.S. equities. Kostin, speaking with Deirdre Bolton on Bloomberg Television's "InsideTrack," also discusses factors driving corporate earnings and the global economic outlook. (Source: Bloomberg)
May 27 (Bloomberg) -- Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong, talks about the outlook for global currencies. Trinh also discusses central banks' monetary policies and Greece's debt problems. She speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Greek Prime Minister George Papandreou
Georges Gobet/AFP/Getty Images
Greek Prime Minister George Papandreou said on May 27 he’ll press ahead with new austerity measures after failing to win backing from the main opposition parties.
Greek Prime Minister George Papandreou said on May 27 he’ll press ahead with new austerity measures after failing to win backing from the main opposition parties. Photographer: Georges Gobet/AFP/Getty Images
Stocks rose worldwide, paring the worst monthly drop since August, and the euro gained amid speculation nations will pledge more aid to Greece. Commodities climbed, Treasuries erased losses as U.S. economic reports missed forecasts, while Colombia’s peso advanced.
The MSCI All-Country World Index jumped 1 percent at 3:11 p.m. in New York, paring this month’s loss to 2.8 percent. The euro climbed to a three-week high of $1.4380, while the yen fell against all 16 major peers. Among 10-year bonds, Greece’s yield slid 39 basis points to 16.04 percent and the rate on the U.S. Treasuries dropped to 3.04 percent from 3.10 percent earlier. Colombia’s currency, bonds and stocks increased as Moody’s Investors Service raised the nation’s debt to investment grade.
European Union leaders will decide on a new aid package for Greece by the end of next month, Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said yesterday in Paris. More than $1.8 trillion was erased from the value of stocks worldwide this month through yesterday as evidence mounted that the U.S. economic recovery is slowing and EU officials struggled to contain the region’s debt crisis.
“Markets are focused on the debt crisis,” said Tom Mangan, who helps oversee $2.7 billion at James Investment Research Inc. in Xenia, Ohio. “We have had a pattern where the impact on the dollar is positive, U.S. bonds do better and stocks fade every time the Greek crisis rears its ugly head, and the other way around. This will continue until we get it resolved.”
Best Performance
The dollar beat stocks, bonds and commodities for the best performance in May through yesterday. The Dollar Index climbed 2.8 percent. The MSCI All-Country World Index of equities fell 3.8 percent, Bank of America Corp. (BAC)’s measures of Treasuries and investment-grade corporate bonds returned 1.5 percent and 1.3 percent, and the S&P GSCI Index of commodities sank 7.9 percent.
Greece’s ASE Index rallied 5.6 percent to lead gains in major developed- and emerging-market stocks. Measures of shares in Hong Kong, Spain, Japan, South Korea, Hungary and Turkey advanced at least 2 percent. The Standard & Poor’s 500 Index, the benchmark gauge of U.S. equities, rose 0.4 percent.
Pfizer Inc., Cisco Systems Inc. and Procter & Gamble Co. climbed at least 1 percent to lead gains in 28 of 30 stocks in the Dow Jones Industrial Average. Intel Corp. (INTC) rose 0.9 percent as the world’s largest chipmaker seeks to challenge Apple Inc. (AAPL)’s iPad and other tablets with a new “ultrabook” laptop.
Economic Reports
U.S. stocks rallied even as economic reports reversed losses in Treasuries. Confidence among consumers unexpectedly declined to a six-month low in May as Americans’ outlook for business conditions and the labor market soured. Business activity cooled more than forecast in May, a sign manufacturing may be leveling off after leading the recovery in the world’s largest economy.
The Stoxx Europe 600 Index climbed 0.8 percent. Alpha Bank SA and EFG Eurobank Ergasias SA led a rally in Greek banks, surging more than 8.5 percent. Nokia Oyj (NOK1V) tumbled 18 percent in Helsinki, falling to the lowest level since 1998, after cutting forecasts for its devices and services unit because of lower prices and competition from Google Inc. and Apple Inc.
The euro climbed 0.6 percent against the dollar and 1.2 percent versus the yen. Japan’s currency weakened against all 16 of its most-traded counterparts after Moody’s Investors Service signaled it may cut the country’s credit rating. The Dollar Index, which tracks the currency against those of six U.S. trading partners, dropped 0.4 percent, falling to the lowest since May 10. The New Zealand dollar gained as much as 1.2 percent to a record 82.64 U.S. cents.
Not Total Restructuring
Greek 10-year bonds yielded 1,302 basis points more than their German equivalents, down from 1,345 yesterday. EU officials have ruled out a “total restructuring” of Greece’s debt, Juncker said yesterday. Germany may stop demanding an early rescheduling of bonds for Greece so the nation can get a new package of loans, the Wall Street Journal reported, citing unidentified people.
Commodities headed for the worst month in a year, snapping the longest winning streak since 1980, as accelerating inflation in China and a sovereign-debt crisis in Europe fanned concern the economic recovery may slow. The Standard & Poor’s GSCI Index of 24 raw-material futures has dropped 7 percent this month, the worst performance since May 2010. The index rebounded 1 percent today.
Oil, Colombia
Crude oil for July delivery climbed 1.7 percent to $102.31 a barrel. Wheat tumbled the most in almost three weeks after Russia, once the second-biggest exporter, said it will allow grain shipments to resume after a 10-month ban. Wheat futures for July delivery dropped 5.2 percent to $7.7750 a bushel.
Colombia’s peso strengthened against 14 of 16 major peers after the government’s credit rating was raised to investment grade by Moody’s Investors Service, which cited economic growth and a reduction in the threat posed by guerrilla groups and organized crime. Moody’s raised Colombia to Baa3, the lowest investment grade, from Ba1. The move puts Colombia’s rating in line with Brazil, Peru and Panama. The outlook is stable.
Colombia’s peso jumped as much as 1 percent to 1,791.24 per dollar, its strongest level since May 11. The yield on the nation’s benchmark peso bonds due July 2024 fell three basis points, or 0.03 percentage point, to 8.14 percent. The IGBC stock index rose 0.7 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
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