Global Stocks Climb to 6-Year High on IMF, Tech RallyNick Taborek and Lu Wang
Global stocks rallied to the highest level in almost six years as Apple Inc. jumped and the International Monetary Fund indicated it would raise its outlook for the American economy.
The MSCI All-Country World Index rose 0.6 percent at 4 p.m. in New York, the highest closing since January 2008. The Standard & Poor’s 500 Index increased 0.5 percent to a record. The Nasdaq Composite Index surged 1.1 percent as technology stocks rallied. Natural gas touched the highest level since July 2011 on speculation over a cold start to the new year. China’s seven-day repurchase rate was the highest since June 20 and the yuan closed at the most since 1993. Futures contracts on Australia’s S&P/ASX 200 Index climbed 0.5 percent as of 5:22 p.m. New York time.
IMF Managing Director Christine Lagarde said yesterday the organization is raising its outlook for the U.S. economy. Consumer spending rose in November by the most in five months as Americans took advantage of store discounts during the year-end shopping season. Apple jumped 3.8 percent after the company struck a deal to sell its iPhones through China Mobile Ltd., the world’s largest phone company. China’s money rates surged as banks hoarded cash to meet year-end requirements.
“It’s a cauldron of bullish factors,” Donald Selkin, who helps manage about $3 billion as the New York-based chief market strategist at National Securities Corp., said by phone. “There’s the seasonal factor, the IMF raising its forecast and the Fed saying they’re going to keep the federal funds rate low.”
Worldwide stocks have rallied 2.5 percent over the past four trading days, boosting gains for 2013 to 19 percent. The Dow jumped 3 percent last week and the S&P 500 climbed 2.4 percent, with both gauges setting records, as the Federal Reserve said it will reduce the pace of bond buying amid faster-than-estimated economic growth. The S&P 500 has advanced 28 percent in 2013, putting it on course for its biggest annual rally since 1997.
The IMF is raising its outlook for the U.S. economy as a budget deal in Washington and the Fed’s plan to taper its bond buying ease doubts about the future, Lagarde said yesterday in an interview broadcast on NBC’s “Meet the Press.” The IMF predicted in October that the world’s largest economy would expand 2.6 percent next year. Lagarde didn’t set out any new projections.
U.S. household purchases, which account for almost 70 percent of the economy, rose 0.5 percent after a 0.4 percent gain in October that was larger than previously estimated, the Commerce Department reported today in Washington. The median forecast of 76 economists in a Bloomberg survey called for a 0.5 percent rise. Incomes climbed less than forecast, reflecting a slump in earnings by farmers.
A separate report showed consumer confidence increased in December. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 82.5 from 75.1 a month earlier. The median forecast of 61 economists in a Bloomberg survey called for 83 after a preliminary reading of 82.5.
“Most of the economic data points suggest stronger growth going forward,” Eric Green, director of research and fund manager at Penn Capital Management, said by phone. The Philadelphia-based firm oversees about $7 billion. “This is a very good seasonal period of time for the markets.”
The S&P 500 has gained 1.2 percent so far this month. December has been the second-best month for U.S. equity returns, according to data compiled by Bloomberg that starts in 1928. The average gain for the month is 1.5 percent, more than twice the overall monthly mean of 0.6 percent. The last December retreat for the S&P 500 was in 2007. U.S. equity exchanges will close early tomorrow, at 1 p.m., before the Christmas holiday.
Technology stocks jumped 1.5 percent as a group in the S&P 500 as Apple ended six years of negotiations, striking a deal that will give both the U.S. phone maker and China Mobile a means to fight declining share in the market of 1.2 billion wireless subscribers. China Mobile will sell the iPhone 5s and 5c models in its stores from Jan. 17, the companies said in a statement that provided no financial terms.
Facebook Inc. surged 4.8 percent as the company began trading as a member of the S&P 500 today. T-Mobile US Inc. rose 2.8 percent after people familiar with the situation said SoftBank Corp. Chief Executive Officer Masayoshi Son is exploring a deal for Sprint Corp. to buy the majority of the wireless-phone provider next year. Micron Technology Inc. slid 3.1 percent after Bank of America Corp. downgraded its rating.
Today’s rally in technology shares helped the Nasdaq Composite surpass 4,120, a level that represents a recovery of 76.4 percent of the index’s decline during the bursting of the Internet bubble. The threshold is seen by Fibonacci analysts as the last obstacle for a full recovery. The benchmark gauge, which plunged 78 percent from its peak of 5,048.62, set on March 10, 2000, would need to climb about 22 percent to reclaim its record.
European stocks rose 3.7 percent last week, the biggest jump since April, after the Fed’s decision to reduce its monthly bond purchases increased investors’ confidence in the strength of the U.S. economic recovery. The Stoxx 600 rallied 16 percent this year, heading for its largest annual increase since 2009.
Shares in Europe are poised for a third year of gains in 2014, restoring almost all the losses suffered during the financial crisis, as economic growth overcomes record pessimism on earnings. Equities will rise 12 percent in 2014, the average projection of 18 forecasters tracked by Bloomberg News shows.
Yields on five-year U.S. notes rose four basis points to 1.68 percent, reaching a three-month high. Thirty-year bonds advanced, pushing yields down to 3.83 percent, amid wagers inflation will stay in check as the Fed slows asset purchases.
The Bloomberg Dollar Index retreated 0.1 percent. The dollar was little changed at 104.15 yen. It climbed to 104.64 on Dec. 20, the highest since October 2008. Japan’s currency slipped 0.1 percent to 142.67 per euro.
China’s seven-day repurchase rate, a gauge of funding availability in the banking system, jumped 124 basis points today to 8.84 percent, the highest level since June 20, according to a daily fixing from the National Interbank Funding Center. The rate, which has more than doubled from 4.37 percent in the past week, touched a record 10.77 percent in June.
The yuan advanced 0.02 percent to close at 6.0702 per dollar in Shanghai, the strongest since the government unified the market and official exchange rates at the end of 1993. The People’s Bank of China boosted the daily fixing today by 0.06 percent, the most since Dec. 9, to 6.1161 per dollar.
The Borsa Istanbul 100 Index of Turkish shares fell 2.1 percent, extending losses to 9 percent since a corruption investigation targeting Prime Minister Recep Erdogan’s government was announced Dec. 17. Emlak Konut CEO Murat Kurum and two board members returned to work yesterday after being questioned as part of the police investigation.
U.S. natural gas advanced 1 percent after earlier climbing to the highest since July 2011. Forecasters including Commodity Weather Group LLC in Bethesda, Maryland, predicted that below-normal temperatures in the central U.S. will spread through the East from Dec. 28 through Jan. 6.
Crude oil dropped 0.4 percent to $98.91 a barrel, retreating from a two-month high.
Gold declined 0.6 percent to $1,197 an ounce on speculation less U.S. stimulus and an improving economy will cut demand for bullion as a protection of wealth. Gold has tumbled 29 percent this year, set for its biggest annual drop since 1981, as some investors lost faith in the metal as a store of value. It climbed the previous 12 years.