U.S. Stocks Rebound While Yen Plunges on Stimulus EffortsStephen Kirkland and Nikolaj Gammeltoft
U.S. stocks advanced, rebounding from yesterday’s drop, as central banks in Japan and Europe reassured investors that they will keep economies awash in cash to bolster growth. Commodities slid for a fifth day and the yen weakened the most since October 2011.
The Standard & Poor’s 500 Index added 0.4 percent at 4 p.m. in New York, rebounding from yesterday’s 1.1 percent retreat from a record. The S&P GSCI Index of 24 commodities lost 1 percent and has tumbled about 3.9 percent in five days. Ten-year Treasury yields fell five basis points to 1.76 percent, the lowest since Jan. 2. Japan’s currency depreciated 3.3 percent to 96.25 yen per dollar while Korea’s won slid to a six-month low. The euro reversed early losses to rally 0.7 percent to $1.2934.
The Bank of Japan said it will buy longer-term government bonds as part of its asset-purchase program while European Central Bank President Mario Draghi said policy will remain accommodative after keeping the benchmark rate at 0.75 percent. U.S. data showed jobless claims increased last week, a day before the monthly payrolls report.
“Expectations were high for the Bank of Japan and they managed to exceed expectations,” Janelle Nelson, a Minneapolis-based portfolio analyst with RBC Wealth Management’s portfolio advisory group, said in a phone interview. Her firm manages about $315 billion in client assets. “The big issue for investors will be what the U.S. employment report shows tomorrow.”
The government report tomorrow is forecast to show a gain of 190,000 jobs in U.S. payrolls last month, following a 236,000 advance in February, according to economists surveyed by Bloomberg. The jobless rate probably stayed at 7.7 percent.
Jobless claims rose by 28,000 to 385,000 last week, the highest since Nov. 24, Labor Department figures showed in a report that reflected the difficulty in adjusting the figures around the Easter holiday and spring break at schools. The median forecast of 47 economists in a survey called for a drop to 353,000.
The S&P GSCI Index extended yesterday’s 2 percent slump and closed at the lowest level since December as 15 of its 24 commodities retreated. Gold for immediate delivery declined as much as 1.1 percent to $1,540.27 an ounce, the lowest in 10 months, before recovering. West Texas Intermediate oil dropped 1.1 percent to $93.54 a barrel and is down 3.9 percent in the past two sessions.
Among U.S. stocks moving today, McDonald’s Corp., AT&T Inc. and Hewlett-Packard Co. rose at least 1.3 percent to lead gains in the Dow Jones Industrial Average while International Business Machines Corp., Alcoa Inc. and Exxon Mobil Corp. fell the most. Brinker International Inc. gained 2.1 percent after Raymond James Financial Inc. raised its rating on the owner of the Chili’s and Maggiano’s restaurant chains.
Best Buy Co. jumped 16 percent, the most since January, after Samsung Electronics Co. said it will staff mini-stores at Best Buy’s U.S. locations to showcase how its tablets, smartphones and televisions work together. Facebook Inc. added 3.1 percent, extending yesterday’s 3.3 percent rally, after introducing smartphone software that puts social-networking features front and center on a handset.
Four shares declined for every one that gained in the Stoxx 600. Banca Generali SpA lost 5.1 percent after Assicurazioni Generali SpA sold part of its stake in the lender. European Aeronautic, Defence & Space Co. dropped 2.7 percent as an investor offered to sell shares worth 384 million euros ($492 million) in the owner of Airbus SAS. BTG Plc gained 1 percent after increasing its sales forecast for 2013.
Banco Espirito Santo SA and Banco Comercial Portugues SA, Portugal’s biggest banks, surged at least 4.8 percent, rebounding from yesterday’s declines of more than 8 percent.
Draghi said the ECB stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth as the debt crisis enters its fourth year.
“Our monetary policy stance will remain accommodative for as long as needed,” Draghi said at a press conference in Frankfurt today. “We will assess all the incoming data in the coming weeks and we stand ready to act.”
With doubts growing about Draghi’s forecast for an economic recovery later this year, the ECB is looking at a range of measures including lower rates, more long-term loans to banks and a program to encourage lending to small- and medium-sized companies, three officials with knowledge of the deliberations said this week. The ECB president said today that officials are “looking at various instruments,” though he stopped short of saying what they would be.
Spain’s two-year note yield dropped five basis points to 2.15 percent and Italy’s fell nine basis points to 1.58 percent.
Hungary’s benchmark equity gauge climbed 0.8 percent as the country’s central bank new chief, Gyorgy Matolcsy, said he will use foreign-currency reserves as part of a 500 billion-forint ($2.1 billion) program to boost lending and support the economy. The forint strengthened 0.7 percent against the euro.
The MSCI Emerging Markets Index fell 0.8 percent to a two-week low as Hyundai Motor Co. and Kia Motors Corp. sank more than 3 percent after recalling vehicles for electronic defects. Benchmark gauges in India, Indonesia and South Korea lost more than 1 percent.
The yen slid more than 2 percent against all of its 16 major peers, dropping the most versus the dollar since Oct. 31, 2011, when the government ordered an intervention in foreign-exchange markets to weaken the currency. It tumbled 4 percent against the euro.
BOJ Governor Haruhiko Kuroda began his campaign to end 15 years of deflation with a strengthened stimulus program that will see the central bank buy 7 trillion yen ($74 billion) of bonds a month, exceeding the median 5.2 trillion yen predicted by economists in a Bloomberg News survey.
The Topix index of stocks rose 2.7 percent, erasing an early 2 percent decline, with trading volume 32 percent more than the 30-day average.
Japan’s central bank has taken “quite an aggressive move,” said Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion. “It shows the Bank of Japan is more serious than they’ve ever been. They are already quite close to doing open-ended quantitative easing anyway and they are likely to announce that later in the month.”