Global Shares Advance on Crude Rally, Dollar Slips as Fed Looms

FOMC Preview: China and a Data Dependent Fed
  • S&P 500 edges higher before Apple earnings; small-caps jump
  • Emerging assets advance as crude rebound outweighs Fed

Global stocks edged higher, halting the longest losing streak since February after crude advanced to a five-month high. The dollar weakened toward a 10-month low as investors braced for tomorrow’s central bank policy decision.

The Standard & Poor’s 500 Index was little changed after three days of closing in a four-point range. Futures on the Nasdaq 100 tumbled 1 percent at 4:44 p.m. in New York after Apple Inc. reported the first quarterly revenue drop in more than a decade and forecast another. Energy producers led a rally in small-cap shares that took the Russell 2000 Index 1.1 percent higher. The Ibovespa led gains among the world’s major equity markets on speculation Brazil would install a former central bank chief as finance minister. Treasuries retreated a seventh day. Crude rallied more than 3 percent before inventory data.

Crude’s advance kept equities afloat as investors await policy decisions from the Federal Reserve and Bank of Japan. The nine-week rally in global equities that erased the worst start to a year on record has faltered in recent days in the face of uncertainty over the path of U.S. interest rates and persistent signs of sluggish growth in the global economy. Corporate results have done little to alter perceptions on the strength of the economy. The disappointing earnings from Apple sent its shares lower by more than 5 percent in afterhours trading.

“The S&P 500 is at what I consider to be a key resistance area in that 2,090 range, so it’s going to take some good news to push through that,” said Alan Gayle, a senior strategist at Atlanta-based RidgeWorth Investments, which has about $37 billion in assets. “The FOMC starts its deliberations now and so it would appear at this critical positioning in the market near resistance that traders may be just waiting on the sidelines until the FOMC is done before making any real bets.”

The Fed concludes its meeting Wednesday, with investors pricing in no chance of an interest-rate increase. The Bank of Japan’s outcome is a day later and most analysts predict Governor Haruhiko Kuroda will unveil a stimulus boost. In the U.S., Apple Inc. releases results Tuesday that may shed more light on the state of the technology sector.

Stocks

The S&P 500 rose 0.2 percent to 2,091.70 at 4 p.m. in New York. The index has alternated gains and losses in the past four sessions after climbing within 1 percent of its all-time high. The Russell 2000 Index jumped 1.1 percent, while the Nasdaq 100 Index fell 0.5 percent in the regular session.

In aftermarket earnings, Twitter Inc. sank after its sales forecast missed estimates, while EBay Inc. advanced as its outlook topped forecasts. AT&T Inc. and Chipotle Mexican Grill Inc. retreated after reporting results.

DuPont Co. advanced in the regular session after raising its 2016 earnings outlook, while JetBlue Airways Corp. and T-Mobile US Inc. gained after their earnings beat estimates. Whirlpool dropped after quarterly results were short of forecasts.

The MSCI Emerging Markets Index rebounded 0.4 percent, after losing 0.4 percent, as stocks in China, India and South Korea advanced. The Ibovespa gained 2.3 percent, halting a three-day slide. This year’s rally sent its valuation to 13.4 times estimated earnings, or 14 percent above the multiple for the broader gauge, according to data compiled by Bloomberg.

Currencies

The dollar fell for a second day, approaching the weakest level in 10 months, as economists and traders see almost zero chance the Fed will raise interest rates. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, fell 0.5 percent, adding to its 4.6 percent decline this year.

The real climbed on bets that Henrique Meirelles, who led the central bank at a time of faster growth, slower inflation and a market rally, would become finance minister if President Dilma Rousseff is ousted.

Commodities

Oil closed at the highest level in more than five months, with futures rising 3.3 percent to settle at $44.04 a barrel amid signs that, while global markets remain oversupplied, the surplus is gradually diminishing. Futures slipped 2.5 percent Monday, the first decline in five days. U.S. crude stockpiles probably expanded by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.

Gold has gone from the best-performing commodity in the first quarter to a metal in wait-and-see mode. Bullion is almost unchanged in April after surging 16 percent in the first three months of the year, the most in three decades. Prices have swung between gains and losses for eight consecutive days, the longest run in a year. Futures climbed 0.3 percent Tuesday to settle at $1,243.40 an ounce in New York.

Bonds

Treasuries fell, pushing the 10-year yield to 1.93 percent, the highest in a month, underscoring speculation that the Fed will keep its outlook for gradual rate increases. While futures show there’s no chance of a move this week, traders have boosted the probability of a rate increase in 2016 to 64 percent from 49 percent last week.

Banks are trying to sell off debt backed by oil and gas reserves, often at a loss, the law firm Haynes and Boone LLP said in a note delivered to clients Monday. Hanging onto these assets is getting more expensive, as regulators pressure banks to set aside more money to cover potential losses on the loans.

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