U.S. Stocks Rally to January Levels Amid Oil Bounce; Bonds Climb

Global Growth: Are We on the Verge of Crisis?
  • S&P 500 rises beyond 50-day average as banking shares jump
  • Treasuries advance amid selloff in Chinese equity market

U.S. stocks rose, pushing the Standard & Poor’s 500 Index to levels last seen at the start of the year, amid speculation anxiety in global financial markets is abating after a rout in China failed to spread. Oil climbed above $33 a barrel, while Treasuries also rose.

The S&P 500 jumped in afternoon trading as banks resumed their rebound from a selloff to start the year. European equities rallied even as the Shanghai Composite Index sank the most in a month. U.S. crude’s advance, which saw futures erase a drop of more than 3 percent, helped Canada’s dollar to a two-month high as the Norwegian krone also gained. Yields on 10-year Treasury notes fell four basis points, while a note auction was rescheduled for technical reasons. American natural gas dropped to a 17-year low on glut concerns.

“After a tough down market, there’s some budding optimism that the worst is perhaps over,” Alan Gayle, senior strategist for Atlanta-based Ridgeworth Investments, which has about $42.5 billion in assets, said by phone. “We had some encouraging macro news that gave the markets the impetus to move higher. The message from that is that all the worries about manufacturing, we may be coming out the other side of them.”

Investors looked past renewed volatility in Chinese shares -- a frequent catalyst for the turmoil in global markets this year -- to focus on U.S. data that showed manufacturing has steadied, along with European company results. Weak euro-area inflation fueled speculation policy makers may face more pressure to boost stimulus, while investors kept an eye on Group of 20 talks in China for any sign that finance ministers will act to address financial-market ructions as crude oil seeks a bottom to its months-long selloff.

Stocks

The S&P 500 climbed 1.1 percent to 1,951.70 as of 4 p.m. in New York, its highest close since Jan. 6. The index also rebounded late Wednesday after a turnaround in oil prices sparked broader buying. Data showing capital goods orders rose in January by the most since 2014 was joined by a separate report that showed the number of Americans filing applications for unemployment benefits rose last week by more than was estimated.

During the session, the S&P 500 closed above its average price from over the past 50 days, a feat last achieved on Dec. 29.

Banks rose for the first time in three days after underpinning a broader rally last week. Altria Group Inc. gained 1.7 percent to lift consumer-staples shares. Chevron Corp. and Exxon Mobil Corp. retreated, while HP Inc. fell 4.4 percent, weighing on the technology-stock group after its profit forecast offered little to inspire investors.

The Stoxx 600 benchmark gauge of European equities added 2 percent in London, with Lloyds Banking Group Plc rallying 14 percent after raising its dividend. Total SA and Royal Dutch Shell Plc advanced to lift energy shares for the first time in three days.

Bonds

U.S. Treasuries rose, with 10-year yields falling to 1.71 percent as the U.S. postponed until Friday a planned auction of seven-year notes. Treasuries have returned 2.8 percent in 2016, according to Bloomberg index data, amid growing worry that sliding energy prices and slowing international growth may bleed through into the broader U.S. economy.

A gauge of inflation expectations in the euro region, which ECB President Mario Draghi has cited in the past, is at the lowest on record. The five-year, five-year forward inflation-swap rate dropped to 1.37 percent on Thursday, the least on a closing basis since Bloomberg started tracking the data in 2004.

The U.S. oil bust could claim two of its biggest victims yet. Energy XXI Ltd. and SandRidge Energy Inc., oil and gas drillers with a combined $7.6 billion of debt, didn’t pay interest on their bonds last week. They have until the middle of next month to either pay the interest, work out a deal with their creditors or face a default that could tip them into bankruptcy.

Japan’s longer-maturity bonds advanced after an auction of two-year notes drew a record-low yield of minus 0.183 percent. The yield on 40-year debt dropped as low as 0.975 percent and the rate on benchmark 10-year securities declined to an unprecedented minus 0.065 percent.

Emerging Markets

Developing-nation stocks slipped a third day, losing 0.2 percent as the selloff in China overshadowed oil’s bounce back for some markets. The MSCI Emerging Markets Index is down 1 percent in February, headed for its ninth retreat in 10 months. Still, valuations near the cheapest level in almost a decade and oil’s newfound stability are attracting some investors back.

Turkish stocks rose for the third time in four days, while Chinese shares traded in Hong Kong dropped the most in two weeks. Shanghai-listed equities tumbled 6.4 percent as the country’s overnight money rate climbed by the most since the Lunar New Year holiday. 

A Bloomberg gauge of emerging-market currencies added 0.2 percent amid renewed demand for high-yielders.

Commodities

West Texas Intermediate crude climbed 2.7 percent to $33.07 a barrel after inventories of gasoline in the U.S. dropped for the first time in 15 weeks.

The rebound was also aided by Venezuelan Oil Minister Eulogio Del Pino, who said during a TV broadcast on TeleSur that crude producers are discussing a March meeting site. Venezuela, Russia, Qatar and Saudi Arabia are also planning to meet in July, he said. Saudi Arabia and Russia proposed a deal earlier this month that would freeze oil production at near record levels.

U.S. natural gas tumbled to the lowest level since March 19, 1999, with supply from American shale formations flooding the market amid forecasts for warmer weather. Gas dropped as much as 5.4 percent to $1.682 per million British thermal units in intraday trading on the New York Mercantile Exchange.

Gold advanced for a third day in the spot market, rising 0.5 percent to $1,235.06 an ounce. The precious metal is poised for an 10 percent gain in February, on track for the best monthly performance since January 2012.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, dropped 0.1 percent. Currency traders are enduring the most-volatile February in six years -- with implied price swings suggesting more fluctuations ahead.

The Loonie jumped 1.2 percent to its strongest level this year, while the krone gained 0.5 percent. The New Zealand and Australian dollars also climbed at least 0.5 percent amid renewed demand for commodity-linked currencies.

The pound halted its steepest decline in more than six years as data confirmed that the U.K. economy gained momentum at the end of last year. The currency has been sliding amid concern a prominent politician’s support for Britain leaving the European Union bolsters the odds of a so-called Brexit.

China’s yuan was little changed at 6.5344 per dollar in Shanghai even as the central bank weakened the daily fixing used by officials to manage the currency. The yuan fell 0.1 percent to 6.5354 in Hong Kong trading, data compiled by Bloomberg show.

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