Stocks Rise on China Data, Syria Discussions; Oil Falls
Global stocks rose for a seventh day, the longest gain in two years, oil fell and the yen slid as data showed China’s economy is improving and Russia bid to get Syria to surrender its chemical weapons to avoid U.S. air strikes. Yields on Treasuries, bunds and gilts increased.
The MSCI All-Country World Index gained 1 percent at 4 p.m. in New York and the Standard & Poor’s 500 Index (SPX) increased 0.7 percent to reach an almost one-month high. Japan’s currency declined against all 16 major counterparts. Treasury 10-year note yields rose six basis points to 2.97 percent as Verizon Communications Inc. marketed what may be a record debt sale. Yields on similar maturity German bunds and U.K. gilts topped 2 percent and 3 percent, respectively. Oil slid almost 2 percent.
China’s industrial production rose 10.4 percent in August from a year earlier and retail sales gained 13.4 percent, the National Bureau of Statistics said on its website today. U.S. President Barack Obama, who will address the nation tonight, said in an interview with NBC News he isn’t confident he’ll get congressional approval for a military strike against Syria and that the Russian proposal to convince Syria to give up its chemical weapons is a “potentially positive development.”
“The recent data out of China has been signaling a bit of a recovery,” Mark Harris, who helps oversee about $1.2 billion as fund manager at City Financial in London, said in an interview. “You’re beginning to see traction globally. This is an opportunity to buy cyclical stocks even though I do expect some sort of a contained pull-back this year and volatility may pick up.”
Obama asked Democratic senators to delay a vote on authorizing military strikes in Syria to allow time for talks on eliminating that country’s chemical weapons, lawmakers said today. The president also asked senators to “keep the threat of credible military action available,” Democratic Senator Tom Carper of Delaware said after the meeting.
Given the developments of the past 24 hours, second-ranking Senate Democrat Dick Durbin of Illinois said it was looking probable that the Senate’s vote on a Syria proposal would slip to next week. Yesterday, Russia announced a bid to get Syria to surrender its chemical weapons.
Gauges of industrial, financial, telephone and consumer-discretionary companies rose at least 1 percent to lead gains among all 10 of the main industry groups in the S&P 500.
Goldman Sachs Group Inc., Visa Inc. and Nike Inc. will be added to the Dow Jones Industrial Average, replacing Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc. in the first reshuffling since September 2012. The changes will boost the number of financial-related companies in the 30-member gauge to five as the fifth-biggest U.S. bank by assets and the largest payment network join JPMorgan Chase & Co., Travelers Cos. and American Express Co. Bank of America is being kicked out even after rallying 109 percent in 2012, the Dow’s largest gain.
Goldman Sachs climbed 3.5 percent, while Nike jumped 2.2 percent and Visa increased 3.4 percent. Hewlett-Packard lost 0.4 percent and Alcoa dropped 0.3 percent. Bank of America added 0.9 percent.
Apple Inc. slipped 2.3 percent. The company announced two new iPhones including one with lower prices and more color options, in a strategy shift by Chief Executive Officer Tim Cook to reach a broader range of customers around the world. A new iPhone known as the iPhone 5C will start at $99 with a two-year contract and will come in five colors, Apple said today. The high-end model called the iPhone 5S will come in three colors including gold.
The Stoxx Europe 600 Index advanced 1.3 percent to the highest level since May as all 19 industry groups climbed. The volume of shares changing hands was 33 percent greater than the 30-day average, according to data compiled by Bloomberg.
Societe Generale SA and Royal Bank of Scotland Group Plc increased more than 3 percent. Neste Oil Oyj surged 13 percent to a five-year high as the Finnish refiner raised its profit forecasts. Alcatel-Lucent SA (ALU), which manufactures telecommunications equipment, jumped 7 percent to a two-year high and PSA Peugeot Citroen, Europe’s second-biggest carmaker, rose 1.8 percent. Glencore Xstrata Plc rallied 2.3 percent after boosting its estimate for financial gains from the merger with Xstrata Plc.
The MSCI Emerging Markets Index climbed 1.7 percent, rising for a fifth day and reaching a three-month high. The Shanghai Composite Index gained 1.2 percent and the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased 1.6 percent. The S&P BSE Sensex increased 3.8 percent and the rupee jumped 2.2 percent as trading resumed following a holiday. The Jakarta Composite Index added 4 percent. Brazil’s Ibovespa retreated for the first time in five sessions.
Dubai’s DFM General Index climbed 8.5 percent, the most among 94 equity indexes tracked by Bloomberg worldwide and the biggest gain since 2009. Benchmark gauges in Abu Dhabi and Qatar jumped 5.5 percent and 4.9 percent respectively. Israel’s TA-25 Index advanced 1.6 percent.
Russia sold its first sovereign bonds in euros, along with dollar debt, raising 725 million euros ($962 million) from seven-year securities and $6 billion in bonds due in 2019, 2023 and 2043. South Africa sold $2 billion of 12-year bonds in overseas debt markets after boosting the size of the offering.
The yen slid 0.7 percent to 100.25 per dollar, the weakest since July 25, and lost 0.7 percent versus the euro. The U.S. currency was little changed at $1.3259 per euro. Norway’s krone jumped 1.3 percent to 7.8616 per euro after inflation accelerated faster than analysts estimated.
Treasury three-year note yields were up four basis points at 0.88 percent, double the 0.44 percent average over the past year, as refuge demand waned on speculation a Russian proposal for Syria to put its chemical weapons under international control will avert a U.S. military strike.
Notes fell even after an auction of $31 billion in three-year debt drew a lower-than-forecast yield. Ten-year yields traded at almost 3 percent after reaching that level last week for the first time since 2011 amid bets the Federal Reserve will trim its $85 billion-a-month stimulus at its next meeting.
Ten-year gilt yields climbed six basis points to 3.02 percent, the highest since July 2011.
Spain’s bonds rallied, pushing 10-year yields below Italy’s for the first time in 18 months. The Italian bonds failed to match the gains in Spanish securities on concern a vote on whether to expel Silvio Berlusconi from Italy’s Senate will destabilize the coalition government.
Verizon Communications Inc. (VZ) prepared to sell what may be a record amount of bonds to finance the purchase of a stake in its mobile phone unit from Vodafone Group Plc. The offering in as many as eight parts may exceed Apple’s $17 billion issue in April.
“The markets have continued the trend of the last week, the equity markets feel very strong and the fixed-income markets on the investment-grade side are watching the Verizon deal,” Matt Freund, chief investment officer at USAA Investments in San Antonio where he helps oversee about $57 billion, said by phone. “We’re starting to see very large transactions to occur in the debt market and the Verizon deal is generating a lot of interest.”
Verizon may sell three-, five-, seven, 10-, 20-, and 30-year debt as soon as Sept. 11, according to a person with knowledge of the offering. The New-York based company may also sell securities in euros, pounds, and possibly yen, Societe Generale analysts wrote in a report dated Sept. 8.
The cost of insuring against losses on corporate bonds fell to the lowest in almost a month. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreased 1.7 basis points to 98.9 basis points, the least since Aug. 14.
Oil dropped for a second day in New York, falling 1.9 percent to $107.39 a barrel and gold declined 1.6 percent to $1,364 an ounce. The S&P GSCI (SPGSCI) gauge of 24 commodities slipped 1.5 percent, the second consecutive decline, as silver retreated 3 percent to help lead gains.
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