U.S. Stocks Rise, Emerging Shares Enter Bull Market; Bonds Gain

Volatility in Oil Impacting Global Markets
  • S&P 500 caps fifth weekly gain, European shares advance
  • Turkish shares enter bull market as crude slips below $40

The Standard & Poor’s 500 Index erased losses for 2016 and emerging-market stocks capped a 20 percent rally from January to enter a bull market as favorable shifts in central-bank policies continued to fuel demand for equities. Oil fluctuated near a three-month high.

The S&P 500 pushed a rally from its February low to 12 percent, erasing the worst-ever start to a year. Gains accelerated this week after the Federal Reserve reined in its forecast for interest-rate increases. The MSCI Emerging Markets Index rose for a third day, pushing its gain from a 6 1/2-year low in January to 20 percent, with Turkish stocks also entering a bull market. A weaker euro boosted earnings prospects for European exporters, boosting equities in the region. U.S. crude slipped below $40 a barrel.

More than $3.5 trillion has been added to the value of global equities this month and commodities have rallied amid central bank steps to spur growth. The Fed’s move complemented a wave of monetary easing that saw Norway and Indonesia cut borrowing costs on Thursday, a week after the European Central Bank boosted stimulus. The People’s Bank of China loosened lenders’ reserve requirements at the start of this month.

“Oil is clearly a near-term positive and we’ve already heard from the Fed,” said Terry Sandven, who helps oversee $126 billion as chief equity strategist at U.S. Bank Wealth Management in Minneapolis. “It’s been a good week and a great month for equities as stocks have benefited from the winds of change. Many of the items that have plagued sentiment and overall equity returns, really since the beginning of the year, seem to be of less of an immediate concern.”

Stocks

The S&P 500 rose 0.4 percent at 4 p.m. in New York, erasing a loss that reached 11 percent in mid-February. The index has rallied for five straight weeks, the longest run since November. The Dow Jones Industrial Average added 0.7 percent to the highest level since Dec. 30. It’s climbed for six straight days, the longest run since Oct. 12.

The Stoxx Europe 600 Index climbed 0.3 percent, paring its first weekly loss in five to 0.2 percent. BHP Billiton Ltd. and Anglo American Plc led a rebound in resource-related stocks as commodity prices increased. Daimler AG and Volkswagen AG pushed carmakers higher as the euro gave up some of its recent gains against the dollar, making exports cheaper. Energy stocks recovered from an early loss as crude prices climbed.

Emerging Markets

The MSCI Emerging Markets Index rose 1.2 percent. Technology stocks led the advance after Tencent Holdings Ltd., Asia’s biggest Internet company, posted a better-than-expected 45 percent jump in quarterly sales.

The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong rose 1.2 percent, following a 2.4 percent rally on Thursday. The Shanghai Composite Index jumped 1.7 percent, with trading volumes 59 percent above the 30-day average, according to data compiled by Bloomberg.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, gained 0.1 percent following a two-day slide of more than 2 percent that drove it to an eight-month low. The Fed cited weaker global growth and turmoil in financial markets for its decision to reduce the number of interest-rate increases forecast for 2016.

The U.S. currency added 0.4 percent to $1.1277 per euro, after falling 1.9 percent in the past three days. 

A gauge of 20 emerging-market currencies was little changed after closing at a four-month high on Thursday.

The ruble rebounded 1 percent after Russia kept interest rates unchanged, in line with forecasts, and oil advanced. South Korea’s won strengthened 0.9 percent, capping a 2.6 percent weekly advance.

Bonds

Treasuries headed for the biggest weekly advance since January after the Fed lowered its rate forecast. Ten-year yields fell two basis points, or 0.02 percentage point, to 1.87 percent. They’ve dropped 12 basis points this week.

Japan’s 10-year bond yield dropped as low as a record minus 0.135 percent, below the negative deposit rate introduced by the Bank of Japan.

Corporate bond issuance has jumped this month, as the European Central Bank expanded its stimulus plans to include buying companies’ debt, and the Federal Reserve scaled back its expected pace for lifting interest rates. Apple Inc. sold $3.5 billion of bonds on Thursday just one month after issuing $12 billion of debt. Brewing giant Anheuser-Busch InBev NV sold 13.5 billion euros ($15.3 billion) of notes on Wednesday in that market’s biggest-ever sale.

Commodities

Crude slipped from a three-month high to trade near $40 a barrel in New York, paring a fifth consecutive weekly gain. In addition to the dollar’s decline, crude has been supported this week by data showing U.S. output fell to the lowest level since November 2014 as well as a planned freeze on production by countries including Saudi Arabia and Russia.

Gold futures headed for the fifth loss in six sessions as gains in equities reduced demand for the metal as a haven. Bullion, heading for a second straight weekly decline that trimmed this year’s rally to 18 percent, is still the best performer among 22 raw materials on the Bloomberg Commodity Index this year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE