Emerging Stocks Rise, S&P 500 Little Changed; Oil Drops
Emerging-market stocks rose a second day as the European Union promised emergency aid to Ukraine while U.S. and Russian diplomats held talks. The Standard & Poor’s 500 Index held near a record while oil declined.
The MSCI Emerging Markets Index gained 0.3 percent by 4:32 p.m. in New York, even as Russian shares fell. The S&P 500 lost less than one point after reaching an all-time high yesterday. Spain’s two-year yield touched 0.67 percent, the lowest level since Bloomberg starting tracking the data in 1993. The yen fell to a one-week low versus the dollar. Nickel rose to a nine-month high, while oil lost 1.8 percent on rising U.S. supplies.
The EU promised 1.6 billion euros ($2.2 billion) in emergency assistance to help the Ukrainian government avert a default, even as Russia defied pleas from the West to loosen its grip on Ukraine’s southern Crimea region. A report from the Federal Reserve today suggested the U.S. economy in most regions grew last month even as harsh winter weather impeded hiring and kept customers away from stores and auto dealerships.
“It’s been an impressively quick rebound from the sober tone that started the week,” Jim Reid, a strategist at Deutsche Bank AG in London, said in a report. “It’s still too early to give the all clear, and with Russian forces reportedly still very much in operational control of the Crimean peninsula we remain largely at the behest of headlines from the Ukraine.”
Russian Foreign Minister Sergei Lavrov said the western-backed government in Kiev no longer rules over Crimea and control has shifted to armed “self-defense” groups. U.S. Secretary of State John Kerry warned Russia against violating “very clear legal obligations” to uphold Ukraine’s unity.
Benchmark equity gauges in Turkey, South Korea and Taiwan gained at least 0.7 percent. The MSCI All-Country World Index of developed and emerging-market stocks advanced 0.1 percent, bringing its two-day gain to 1.4 percent and closing at the highest level since December 2007.
Russia’s Micex Index (INDEXCF) slipped 0.4 percent, leaving the gauge down 6.5 percent this week. Stocks rallied 5.3 percent yesterday, the Micex’s biggest one-day climb since May 2010. The ruble was little changed against the dollar at 36.04 after see-sawing between gains and losses the previous two days.
Qatar’s benchmark index slipped 2.1 percent, the most since August, after three Persian Gulf nations withdrew ambassadors from the gas-rich kingdom amid allegations it meddling in regional affairs. Gulf countries have been critical of Doha’s support for the Muslim Brotherhood.
Investors are demonstrating confidence in the American economy by pouring cash back into risky assets and out of government securities. BlackRock Inc.’s $13.7 billion exchange-traded fund that focuses on junk bonds reported its biggest daily deposit since October yesterday, according to data compiled by Bloomberg. Investors funneled $1.9 billion yesterday into U.S. stocks, which have recovered from a 3.5 percent loss in January.
Exxon Mobil Corp. (XOM) dropped 2.8 percent, the most since November 2012, to lead a gauge of energy producers lower. Target Corp. fell 1.2 percent in a third day of declines after the retailer’s chief information officer resigned.
Eight of the Fed’s 12 districts “reported improved levels of activity, but in most cases the increases were characterized as modest to moderate,” the Fed said today in its Beige Book business survey. The New York and Philadelphia districts reported declines that were “mostly attributed to the unusually severe weather experienced in those regions.”
Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather. The Labor Department will release its February jobs report March 7. Economists estimate employers increased the pace of hiring to 150,000 workers after adding 113,000 in January, according to a Bloomberg survey.
“Markets are continuing to give a free pass to any weak economic number because of the weather,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages $414.7 billion, said by phone from Boston. “That could be the case for much of the data we’re going to get through February. Stocks will ignore the data if it’s bad and rally on the number if it’s good.”
West Texas Intermediate crude oil dropped to $101.45 a barrel after sliding 1.5 percent yesterday from a five-month high. The Energy Information Administration said U.S. oil supplies rose by 1.43 million barrels last week to 363.8 million. Prices also slid on speculation that the Ukraine dispute won’t escalate enough to disrupt oil shipments.
Nickel led industrial metals higher after China retained its goal for economic growth, bolstering the outlook of metals demand. China’s growth target of 7.5 percent for 2014 is the same as last year’s, Premier Li Keqiang said today at an annual meeting of the National People’s Congress in Beijing.
Palladium for immediate delivery increased 1.2 percent to $772.55 an ounce, rising for a fifth day. The premium afforded Arabica coffee over the robusta variety widened to a two-year high amid a drought in Brazil, the world’s top producer and exporter of Arabica. Orange-juice futures rose to a 22-month high.
Spain’s 10-year bond yield dropped to 3.36 percent, the lowest level since 2006, while the rate on similar-maturity Italian bonds reached 3.36 percent, the least since 2005. Yields on U.S. 10-year Treasuries were little changed at 2.7 percent.
Japan’s currency weakened versus all of its 16 main counterparts. The yen weakened 0.1 percent to 102.34 per dollar after falling to 102.55, its lowest level since Feb. 26.
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