Emerging-market stocks led global equities higher as faster-than-estimated Chinese export growth bolstered optimism in the global economy. The Standard & Poor’s 500 Index and India’s benchmark gauge rose to close at record highs, while natural gas jumped on colder U.S. weather.
The MSCI Emerging Markets Index added 1 percent by 4:25 p.m. in New York, the biggest jump in three weeks. The S&P 500 rose 0.2 percent to 1,808.37 and the Stoxx Europe 600 Index gained 0.2 percent. India’s S&P BSE Sensex Index climbed to an all-time high after the main opposition party won four state elections. The yen slid versus most of its 16 major peers, dropping to a five-year low to the euro. U.S. natural gas jumped 3 percent after arctic air from Canada created ice storms.
China’s trade surplus widened in November as exports climbed the most in seven months, data showed yesterday, adding to confidence the global economy can withstand a cut in Federal Reserve stimulus after U.S. payrolls beat estimates last week. St. Louis Fed President James Bullard said the odds of tapering bond purchases have risen along with gains in the labor market. Reports today showed German industrial output unexpectedly fell in October while overseas shipments rose for a third month.
“People are getting more comfortable with the idea of tapering and the concept that the reason for the taper is that the economy is getting stronger,” Walter Todd, who oversees about $950 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “At the end of the day that’s a good thing not a bad thing.”
The gauge has climbed 27 percent this year, heading for its biggest annual gain since 1997. Household wealth in the U.S. increased from July through September as improvement in the home and equity markets boosted balance sheets. Net worth for households and non-profit groups rose by $1.92 trillion in the third quarter, or 2.6 percent from the previous three months, to $77.3 trillion, the Fed said today.
The share of economists predicting the U.S. central bank will reduce bond buying in December doubled after the data showed back-to-back monthly payroll gains of 200,000 or more for the first time in almost a year.
The Federal Open Market Committee will probably begin reducing its $85 billion in monthly bond purchases at a meeting Dec. 17-18, according to 34 percent of economists surveyed Dec. 6 by Bloomberg News, an increase from 17 percent in a Nov. 8 survey. In November, 53 percent predicted a tapering in March, compared with 40 percent in yesterday’s poll of 35 economists.
The Fed has made money the cheapest and most widely available of any time in U.S. history and “one would be foolish not to exploit it now,” Dallas Fed President Richard Fisher said. Cheap money and abundant liquidity is “coursing over the gunwales of the ship of our economy,” Fisher said in text of speech in Chicago. He said it is “placing us at risk of becoming submerged in financial shenanigans rather than in conducting business based on fundamentals.”
Bullard of the St Louis Fed said that any reduction in bond purchases should be modest to account for slow inflation.
Gauges of commodity, financial, telephone and industrial shares led advances in eight of the 10 main industry groups in the S&P 500 today. General Electric Co., Chevron Corp. and Microsoft Corp. all rose more than 0.8 percent to lead the Dow Jones Industrial Average less than 0.1 percent higher.
Sysco Corp. jumped 9.7 percent after the food distributor agreed to buy closely held US Foods in a deal valued at about $3.5 billion. Gilead Sciences Inc. advanced 1.6 percent after getting approval for a hepatitis C pill that may generate more than $6 billion in annual sales. McDonald’s Corp. (MCD) dropped 1.1 percent after November sales missed analysts’ estimates.
Yields on 10-year U.S. Treasury notes were little changed at 2.85 percent. The rate on similar-maturity Italian bonds dropped 4.9 basis points to 4.13 percent. The yield was 6.6 basis points lower at 4.11 percent on similar Spanish securities.
Almost two shares rose for each that declined in the Stoxx 600, with trading volumes 18 percent less than the 30-day average. Banca Monte dei Paschi di Siena SpA rallied 4.9 percent after its biggest shareholder said it would vote in favor of a share sale if it were delayed to the second quarter.
Inmarsat Plc climbed 5.8 percent after the world’s biggest provider of maritime-satellite services said the launch of its Global Xpress satellite was successful. Aviva Plc gained 2.3 percent after Bank of America Corp. added the U.K.’s second-biggest insurer to its top European picks list.
American mutual funds are scouring Europe for bargains, snapping up Dutch oil drillers, French drugmakers and Swiss food producers on speculation the region’s rally is just beginning as the U.S. bull market ages.
Oliver Pursche, a Suffern, New York-based manager beating 97 percent of rivals in 2013, bought Total SA (FP) and Royal Dutch Shell Plc for their relatively high dividends and low valuations relative to peers. Sanofi in Paris is among about 25 new stocks added by Timothy Ghriskey’s Solaris Asset Management LLC in Bedford Hills, New York. Overseas companies that get most of their sales from within the U.S. are favorites of Paul Zemsky, the head of asset allocation at ING Investment Management.
The allure of European stocks is drawing managers with almost $5 trillion under management after $13 trillion was added to U.S. equity prices since March 2009 and the S&P 500 capped its best stretch of weekly gains since 2004. While investors speculate the Fed will cut stimulus, they are betting the European Central Bank will keep economic measures for longer. Europe’s economy is forecast to return to growth next year.
The trade surplus in China climbed to $33.8 billion, the widest since January 2009. Shipments rose 12.7 percent from a year earlier, topping projections from 41 of 42 analysts surveyed by Bloomberg News. Imports gained 5.3 percent, less than the median estimate of 7 percent. The National Bureau of Statistics said today the consumer-price index increased 3 percent from a year earlier, compared with a 3.1 percent median estimate of 43 analysts surveyed by Bloomberg News and a 3.2 percent increase in October.
A gauge of Chinese stocks traded in Hong Kong rose 0.5 percent, while the city’s benchmark Hang Seng Index advanced 0.3 percent.
“Chinese exports were much stronger than expected, which is helping the rest of north Asia as well,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London. “In India, the opposition did better in state elections than expected. The sentiment is more positive for emerging markets now than compared to the summer because the growth cycle in emerging markets is at least accelerating.”
India’s rupee gained 0.5 percent to 61.1350 per dollar, strengthening for a fourth day.
Election victories by the Bharatiya Janata Party in areas holding about a sixth of India’s 1.2 billion people would give it momentum to end the ruling Congress party’s decade-long rule in elections due by May. The wins will boost the benchmark stock index by as much as 6 percent by year-end, according to the average of 10 estimates compiled by Bloomberg last week.
Thailand’s Prime Minister Yingluck Shinawatra today called for fresh elections as protesters began converging on Government House in Bangkok to push for her ouster. The nation’s SET Index added 0.4 percent, after climbing as much as 1.2 percent and losing 0.4 percent.
Japan’s currency slipped 0.6 percent to 141.92 per euro, the weakest level since October 2008. The yen slipped 0.4 percent to 103.32 per dollar after touching 103.38 Dec. 3, the weakest price since May 23. The 17-nation euro currency climbed 0.2 percent to $1.3737, the strongest level since the end of October.
“You’re in this sweet spot for dollar-yen where the markets are beginning to believe tapering is coming but risk appetite is not being disrupted,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “In a climate of risk appetite being strong into year-end and equities moving higher, that’s certainly supportive for the euro. The obvious trade is euro-yen.”
South Korea’s won advanced 0.5 percent to close at 1,052.90 per dollar in Seoul, data compiled by Bloomberg show. The currency touched 1,051.73, the strongest level since Aug. 2, 2011.
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