Chinese Shares Enter Bull Market; Commodities Gain Second Day

Chinese shares in Hong Kong entered a bull market, leading emerging market stocks higher as commodities rose for a second day. Russian stocks fell to the lowest level since May.

The Hang Seng China Enterprises Index (HSCEI) rose 0.7 percent to 11,072.62 at the close in Hong Kong. The Bloomberg Commodity Index of 22 raw materials climbed 0.1 percent by 9:49 a.m. in London as aluminum jumped 1 percent and lead advanced to a 17-month high. The yield on 10-year Treasury notes gained two basis points to 2.49 percent. The Stoxx Europe 600 Index slipped less than 0.1 percent after two weeks of gains. Standard & Poor’s 500 Index futures (SPX) dropped 0.1 percent.

Chinese industrial-company profits jumped the most last month since September, data yesterday showed. The Obama administration said it had satellite photos showing Russia firing across the border at Ukraine forces, as the U.S. and Europe consider more sanctions.

“The strong Chinese stock market and better economic figures from the U.S. and China as a result of a series of mini-stimulus measures by the Chinese authorities are making the atmosphere rosier,” Richard Fu, director of Asian commodity trading at Newedge Group SA in London, said by e-mail today. “The general feeling at the moment is still bullish.”

Ukraine Conflict

Russia’s Micex has declined 9.6 percent from its peak on June 24. Ukraine’s forces were attacked twice from Russian territory, the Ukrainian defense ministry said in a posting on Facebook, without giving further details.

German Economy and Energy Minister Sigmar Gabriel said yesterday that bank accounts held in Europe by oligarchs close to Putin should be frozen. Dutch Prime Minister Mark Rutte said signs of heavy fighting prevented investigators from reaching the crash site of Malaysian Air Flight 17. Russia’s ambassador to the European Union threatened a “symmetrical” response to “hostile” sanctions as the U.S. said it has photos of Russia shelling Ukraine.

The Bloomberg commodity index advanced after gaining 0.2 percent on July 25. Aluminum rose to $2,016.25 a metric ton and lead advanced as much as 1.6 percent to the highest price since Feb. 28, 2013. China is the biggest buyer of industrial metals. Gold declined 0.3 percent to $1,302.95 an ounce. West Texas Intermediate oil declined 0.4 percent to $101.71 a barrel. U.K. natural gas dropped 4.8 percent, the biggest decline since March 4, according to broker prices on Bloomberg, on forecasts for warmer-than-normal weather.

Treasuries Decline

The decline in Treasuries pushed the 30-year yield up from near a 13-month low. Policy makers at the Fed start a two-day meeting tomorrow, while the U.S. is due to auction $93 billion of two-, five- and seven-year securities this week as well as $15 billion of two-year floating-rate notes. The 30-year rate climbed two basis points to 3.26 percent.

Portuguese bonds rose for a fourth day after Moody’s Investors Service upgraded the nation to Ba1 from Ba2. The 10-year yield fell four basis points to 3.60 percent.

The dollar was about 0.1 percent from the strongest level in eight months against the euro as investors raised bets it would climb versus the single currency to the most since November 2012.

Goldman Sachs

The U.S. currency was at $1.3434 per euro, little changed from July 25, when it reached the strongest level since Nov. 21. The dollar was at 101.88 yen from 101.84 at the end of last week.

Goldman Sachs Group Inc. cut its rating on global stocks to neutral, the equivalent of hold, for the next three months, saying they are at risk of a brief selloff, according to a quarterly strategy report July 25. The bank also lowered corporate credit to underweight and predicted that U.S. government bond yields will increase.

The Stoxx 600 was little changed after a 0.7 increase last week. Automakers and financial-services companies fell the most among 19 industry groups in the Stoxx 600 today.

Wincor Nixdorf AG sank 9.3 percent after the German maker of automated teller machines posted third-quarter revenue that fell short of analysts’ estimates. Aberdeen Asset Management Plc (ADN) lost 3.1 percent after the money manager reported a drop in third-quarter assets under management. TNT Express NV slid 5 percent after the Dutch package-delivery company posted second-quarter sales that missed analysts’ estimates.

Ryanair Profit

Ryanair Holdings Plc (RYA) added 3.9 percent after Europe’s biggest discount carrier raised its full-year profit goal as it posted first-quarter earnings that more than doubled. Reckitt Benckiser Group Plc advanced 2.6 percent after the maker of Durex condoms said it will spin off its pharmaceutical business.

Futures on the S&P 500 expiring in September were little changed today after a drop in the index on July 25 trimmed its weekly advance to less than 0.1 percent.

Tyson Foods Inc., Eastman Chemical Co. and Range Resources Corp. are among S&P 500 companies reporting earnings today. About 79 percent of those that have posted results this season have beaten analysts’ estimates for profit, while 66 percent exceeded sales projections, data compiled by Bloomberg show.

Profits at S&P 500 members probably rose 8.2 percent in the second quarter, while sales gained 3.5 percent, according to analyst estimates compiled by Bloomberg.

The MSCI All-Country World Index slid less than 0.1 percent today after last week’s 0.4 percent advance. The MSCI AC Asia Pacific Index (MXAP) rose 0.2 today, climbing to its highest level since June 2008.

Preliminary data at 9:45 a.m. Washington time may show the Markit Economics purchasing managers’ index for the services industry fell to 59.8 in July from 61 in the prior month, according to economists surveyed by Bloomberg. A separate report at 10 a.m. from the National Association of Realtors may show a pending home-sales index climbed 0.5 percent in June following a 6.1 percent gain in May.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net Alaric Nightingale

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