Stocks Gain on China Exports as Yen Weakens on OlympicsNikolaj Gammeltoft and Stephen Kirkland
Stocks rose in the U.S. and emerging markets and currencies from South Korea’s won to Malaysia’s ringgit strengthened as Chinese exports topped forecasts. Japanese shares gained and the yen weakened after Tokyo was selected to host the 2020 Olympics.
The Standard & Poor’s 500 Index added 1 percent to 1,671.71 as almost $15 billion in takeovers involving U.S. companies helped send the benchmark gauge to its biggest gain in five weeks. The MSCI Emerging Markets Index climbed 2 percent, the most since July 11. The Shanghai Composite Index surged 3.4 percent while the won advanced almost 1 percent versus the dollar and the yen slid 0.5 percent. Japan’s Topix Index jumped 2.2 percent. Treasuries rose, with 10-year yields down 3 basis points to 2.91 percent. Oil fell from a two-year high as concern eased about an imminent strike against Syria.
Shares in Shanghai climbed the most this year as a 7.2 percent jump in overseas shipments bolstered optimism in the global economy. Japan’s Prime Minister Shinzo Abe said yesterday the Olympics will spur construction and help overcome deflation before data today showed the economy expanded more than initially estimated last quarter. In the U.S., President Barack Obama tried to persuade Congress to support air strikes against Syria.
“We’re latching on to the better trading in Asia after the Chinese data,” Robert Pavlik, New York-based chief market strategist at Banyan Partners LLC, said by phone. His firm manages about $4.4 billion. “The fact that nothing has transpired in Syria is also a positive in a strange sense. The Street is somewhat relieved that the U.S. hasn’t engaged in military action yet.”
President Obama intensified his campaign to persuade a reluctant American public to back military action against Syria as Bashar al-Assad threatened retaliation “direct and indirect” if the U.S. attacks. Russia urged Syria to give up its stockpile of chemical weapons if doing so would help avoid a U.S.-led strike, Foreign Minister Sergei Lavrov said after meeting his Syrian counterpart in Moscow today. Syria “welcomes the Russia proposal,” Walid al-Muallem, the nation’s foreign minister, told reporters.
The S&P 500 advanced for a fifth straight day, its longest rally since July, after capping a 1.4 percent weekly gain on Sept. 6.
Technology, industrial and commodity stocks rallied at least 1.2 percent to lead gains in all 10 of the main industry groups in the S&P 500. Trading of stocks in the index was in-line with the 30-day average.
Molex Inc., a maker of electronic components for products such as the iPhone, jumped 32 percent to a seven-year high of $38.63 after agreeing to be acquired by Koch Industries Inc. in a $7.2 billion deal. Neiman Marcus Inc., the Dallas-based luxury chain, agreed to sell itself to Ares Management LLC and the Canada Pension Plan Investment Board for $6 billion.
The U.S. market is poised for the busiest month of takeovers in more than six years. About $160 billion of mergers and acquisitions have been announced since the end of August, the most for a full month since July 2007, data compiled by Bloomberg show.
Apple Inc. rose 1.6 percent before an event tomorrow where the company will introduce new models of the iPhone. Delta Air Lines Inc. rallied 9.4 percent as S&P Dow Jones Indices said the world’s second-largest carrier will replace BMC Software Inc. in the S&P 500.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased 1.9 percent. Exports from China climbed 7.2 percent last month, compared with the 5.5 percent median estimate in a Bloomberg survey, the General Administration of Customs said in Beijing yesterday. Benchmark gauges in Turkey, Indonesia and Thailand jumped at least 2.9 percent.
“Those export numbers are very good news, quite reassuring because so far growth has been the main concern not only for China, but for the whole emerging markets,” Benoit Anne, head of emerging-markets strategy at Societe Generale SA in London, said on Bloomberg Television’s “On the Move.” “I feel a little bit better about the growth outlook for the whole emerging markets at this point.”
The won climbed to a four-month high against the dollar and the ringgit advanced 1.1 percent, the most since June. China is South Korea’s biggest export market and second-largest for Malaysia.
While bonds rallied today, the biggest firms on Wall Street including BlackRock Inc. are predicting losses in emerging markets will intensify as the Federal Reserve considers curtailing record stimulus. Investors have pulled $22.1 billion from emerging-market bond funds since the end of April, almost five times the amount pulled from U.S. corporate credit, according to EPFR Global.
Russia is raising $6 billion of bonds in dollars and its first notes in euros, seizing on improved investor sentiment before the Fed meeting that may mark the start of a tapering in stimulus measures. The sale includes $3 billion of 10-year bonds and a seven-year note in euros, according to a person with direct knowledge of the offerings, who asked not to be identified because the information isn’t public. It canceled a 12-year issue in euros, the person said.
Stocks fell in the Middle East amid concern about tensions in Syria. The Bloomberg GCC 200 Index of the region’s biggest stocks declined 0.3 percent to the lowest since June.
Copper rose 0.5 percent. China is the biggest buyer of the metal. West Texas Intermediate oil fell 0.9 percent to $109.52 a barrel, retreating from a two-year high. The S&P GSCI gauge of 24 commodities slipped 1.3 percent, the first drop in three days.
The Stoxx Europe 600 Index closed little changed after a three-day rally. BG Group Plc lost 5.1 percent as the U.K.’s third-largest oil and gas producer said production next year will be lower than expected because of unrest in Egypt, a project delay in Norway and depressed U.S. natural-gas prices.
The Topix climbed to a one-month high, with trading volume about 40 percent more than the 30-day average. Developers and construction stocks led gains as all but one of the gauge’s 33 industry groups advanced. The yen weakened against all of its 16 major peers, depreciating 0.5 percent to 99.57 per dollar.
Treasuries advanced for a second day before reports this week that economists said will show growth in import costs and producer prices from a year ago slowed as the economy struggled to gain momentum. The number of workers on U.S. payrolls rose by 169,000 last month, less than the 180,000 median forecast of economists surveyed before the data were released on Sept. 6.
The Federal Open Market Committee is scheduled to meet on Sept. 17-18. It will cut Treasury purchases to $35 billion from $45 billion, while maintaining mortgage-bond buying at $40 billion, according to the median of 34 responses in a Bloomberg survey released on Sept. 6.
Kansas City Federal Reserve Bank President Esther George, who has consistently dissented against additional stimulus, said on Sept. 6 that it would be appropriate to reduce the pace of purchases to $70 billion a month.
The cost of insuring against losses on corporate bonds fell to the lowest in two weeks. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreased almost 4 basis points to 100.54 basis points, the least since Aug. 23.