U.S. stocks gained for a second day, with the Standard & Poor’s 500 Index returning to a five-year high, and commodities advanced following faster-than-forecast growth in Chinese exports. The euro and Spanish bonds rallied.
The Standard & Poor’s 500 Index added 0.8 percent to 1,472.12 at 4 p.m. in New York, above its highest closing level since December 2007. The S&P GSCI commodities index rose to the highest since October as oil reached a three-month high. The euro jumped as much as 1.6 percent to $1.3266, the biggest gain since August, as the region’s central bank left interest rates unchanged. Spain’s two-year note yields fell 29 basis points to 2.11 percent after the country sold more debt than targeted.
China’s export growth and a 28 percent increase in a broad measure of credit fueled speculation the nation’s new leaders will sustain a pickup in economic growth after a seven-quarter slowdown. European Central Bank President Mario Draghi said today’s decision to keep interest rates on hold was unanimous and the euro-area economy will slowly return to health this year. Spain sold 5.8 billion euros ($7.6 billion) of bonds, more than the maximum target of 5 billion euros.
“China is definitely healing,” Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston, said in a phone interview. “Stocks started to do better after Draghi’s comments. People feel that the recovery will take hold. As long as we don’t see Greek- Portugal-Spain debacle in 2013, those markets should continue to do better.”
Ford Motor Co., the second-largest U.S. carmaker, gained 2.7 percent after increasing its dividend. Supervalu Inc. surged 14 percent after an investor group led by Cerberus Capital Management LP agreed to buy five of its chains in a transaction valued at about $3.3 billion. Tiffany & Co. sank 4.5 percent as the jewelry retailer said earnings will be at the low end of its forecast.
The Stoxx Europe 600 Index lost 0.3 percent after rising yesterday to a 22-month high. Cie. Financiere Richemont SA fell 2.1 percent after the forecast from its U.S. peer Tiffany. Sanofi lost 0.7 percent after U.S. regulators cut the recommended dosage of some drugs including those sold by the French company. Nokia Oyj surged 11 percent after saying its handset business probably saw a profit in the fourth quarter.
MAN SE jumped 3.5 percent as Volkswagen AG (VOW) offered to take full control of the German truckmaker. Europe’s largest carmaker already holds 75.03 percent of MAN’s voting rights.
The euro gained against all 16 major counterparts, advancing 1.9 percent versus the yen.
The unanimous decision by the ECB to leave interest rates unchanged “is a major change as the fundamental scenario has not changed much since December but the ECB seems to be more optimistic due to the development of financial markets,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, said in an e-mailed note.
Treasury 30-year bonds pared losses after the first U.S. sale this year of $13 billion in the securities was met with stronger-than-average demand. The bonds drew a yield of 3.07 percent, compared with a forecast of 3.095 percent in a Bloomberg News survey of nine of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.77, tied for the highest since December 2011.
Thirty-year yields were up two basis points at 3.08 percent after climbing four points earlier.
The yield on Spain’s 10-year bond fell 23 basis points to 4.90 percent, falling below 5 percent for the first time since March. The rate on Italy’s two-year note slid 18 basis points to 1.37 percent.
Borrowing costs fell at Spain’s auction with the 2015 note yielding 2.476 percent, compared with 3.282 percent the last time a similar maturity was sold on Oct. 4. The yield on the 2018 bond was 3.988 percent, down from 4.680 percent at the previous sale on Nov. 8.
“Europe was the story for 2012, will it hold together?” said Bob Doll, chief equity strategist at Nuveen Asset Management. “What about the systemic risk related to the banks, etc. Look, they are not out the woods, but I think it will be less of the negative headlines on 2013 that it was in 2012.”
U.K. 10-year inflation-linked gilts advanced, with the yield on the securities touching a record-low minus 0.99 percent, after National Statistician Jil Matheson said the U.K. should maintain its current approach to calculating its retail price index, easing investor concern changes to the measure may have impaired payments on inflation-linked bonds.
The S&P GSCI advanced to the highest level on a closing basis since October, with copper climbing 0.4 percent. China is the world’s biggest user of industrial metals and energy. Oil jumped 0.8 percent to $93.82 a barrel, the highest settlement price since Sept. 18.
China’s overseas sales rose 14.1 percent in December from a year earlier, almost triple the 5 percent gain predicted in a Bloomberg analyst survey, data showed today.
“China is back on the growth path and the imports of industrial metals will continue to remain strong,” said Eugen Weinberg, the head of commodity research at Commerzbank AG in Frankfurt. “Copper is likely to remain in focus.”
The MSCI Emerging Markets Index (MXEF) added 0.5 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 1 percent. South Korea’s Kospi index jumped 0.8 percent and Taiwan’s Taiex added 0.9 percent. Brazil’s Bovespa index increased 0.2 percent.
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