U.S. and European stocks rebounded from recent selloffs amid optimism Greece will reach a deal with creditors. Commodities producers rallied as oil advanced to a 2015 high and gold climbed the most in four weeks.
The Standard & Poor’s 500 Index rose 1.2 percent by 4 p.m. in New York. The index’s biggest gain in a month nearly wiped out a three-day slump that ended yesterday. The Stoxx Europe 600 Index climbed the first time in seven days. Germany’s 10-year bund yield topped 1 percent for the first time since September and Treasury 10-year rates hit October highs. U.S. oil jumped 2.1 percent as gold futures added 0.8 percent. New Zealand’s dollar slumped after an unexpected interest-rate cut.
German Chancellor Angela Merkel told reporters Wednesday her goal is “to keep Greece in the euro area,” with less than three weeks to go before the indebted nation’s aid program expires. U.S. crude stockpiles capped their longest stretch of weekly declines since August, damping concern over the global supply glut. The Reserve Bank of New Zealand surprised economists in reducing rates by 25 basis points, saying further easing may be needed and the currency remains overvalued.
“The Germans have officially blinked and off we go,” Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York, said by phone. “U.S. data has been better in general but more people are coming around to the fact the Fed is seeing all this volatility in the bond market and is afraid to raise rates, there isn’t too much tumult, oil has stabilized and so we move on.”
Optimism the months long standoff over Greece will reach a favorable resolution got a boost as the European Central Bank raised the level of emergency cash available to the country’s banks by 2.3 billion euros ($2.6 billion), people familiar with the decision said.
Germany may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds, according to two people familiar with the country’s position. A government spokesman later denied that Germany is considering such a deal.
The S&P 500 fell on Monday to a two-month low before edging higher Tuesday. The index had tumbled 2.4 percent from its May record amid concern the Federal Reserve will raise benchmark rates as early as September. The gauge this year is trading in the smallest range since at least 1995, with the 2015 low only 6.5 percent below its year-to-date high.
The rebound on Wednesday was broad, with all 30 members of the Dow Jones Industrial Average advancing and each of the 10 main S&P 500 groups rising. Energy shares in the larger index climbed 1.2 percent, while technology shares surged 1.6 percent to lead gains.
Following the close of trading, the World Bank joined the IMF in urging the Federal Reserve to hold off raising rates until next year, citing an uneven U.S. recovery and the risks to emerging markets of tightening policy any sooner. The Washington-based development bank lowered its forecast for U.S. growth this year to 2.7 percent, from 3.2 percent in January.
The kiwi sank as much as 2.5 percent to 70.19 U.S. cents after the RBNZ’s decision, its weakest intraday level since September 2010.
“A reduction in the OCR is appropriate given low inflationary pressures and the expected weakening in demand,” Governor Graeme Wheeler said Thursday in Wellington, referring to the official cash rate. “We expect further easing may be appropriate. This will depend on the emerging data.”
The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, sank 0.8 percent Wednesday in a third day of declines.
Japan’s currency strengthened after Bank of Japan Governor Haruhiko Kuroda said it was hard to see further losses. The yen reached 122.46 per dollar, the strongest since May 26, after it touched 125.86 on June 5, the weakest since June 2002.
“The yen is unlikely to weaken further in real effective terms if you think with common sense, given how far it has come,” Kuroda said in parliament Wednesday.
The Stoxx 600 rose 1.4 percent after hitting the lowest level since February on Tuesday. Energy and commodity producers posted the biggest gains, while technology companies fell. Greece’s ASE Index ended the session 1.1 percent lower.
The MSCI Emerging Markets Index added 0.7 percent as benchmark gauges in India, Poland, Taiwan and Turkey gained more than 1 percent. The index is poised to halt its longest slump since 1990.
Ten-year Treasury yields approached 2.5 percent for the first time since October, boosting demand at a $21 billion auction of the notes Wednesday. U.S. debt pared losses after the sale produced a lower-than-forecast yield and the highest demand since December. Yields ended the New York day up five basis points, or 0.05 percentage point, at 2.49 percent.
Bonds ended mixed in the euro area, with higher-yielding debt rising. Portugal’s 10-year yield slipped two basis points to 2.98 percent after rising above 3 percent for the first time since Nov. 24. Italy’s 10-year yield slipped four basis points to 2.25 percent. German bund rates climbed three basis points to 0.98 percent after briefly topping 1 percent.
Oil’s rally since the end of January has stoked inflation expectations and cut the appeal of fixed payments. West Texas Intermediate climbed to $61.43 a barrel, following Tuesday’s 3.4 percent jump. U.S. crude stockpiles fell a sixth week, the longest stretch of declines since August.
Gold futures climbed the most in four weeks. The metal for August delivery advanced to $1,186.60 an ounce in New York, the biggest gain since May 13.
Copper rose the most in five weeks on moves to ease a credit crunch in China, the world’s top consumer of industrial metals. Futures for July deliver rose 1.2 percent to settle at $2.747 a pound in New York. Nickel, aluminum and tin also rose.