Global Stocks, Dollar Rise After Earnings, Inflation DataOliver Renick
Global stocks rallied, while the dollar reached an eight-month high against the euro, after corporate earnings improved and data showed rising U.S. consumer prices. Russian shares rose for the first time in seven days.
The MSCI All-Country World Index added 0.7 percent as of 4 p.m. in New York and the Standard & Poor’s 500 Index climbed 0.5 percent, touching an intraday record. Russia’s Micex Index jumped 1.6 percent. The dollar appreciated 0.4 percent to $1.3468 per euro. Zinc reached an almost three-year high amid lower stockpiles, while losses in agricultural crops and natural gas led the S&P GSCI Index of commodities lower.
Some 36 companies in the S&P 500 report earnings today, including Microsoft Inc. and Apple Inc. The U.S. consumer price index increased 0.3 percent in June, matching the median forecast from economists surveyed by Bloomberg. A train carrying 282 bodies and remains of other victims of Malaysian Airlines flight MH17 arrived in Kharkiv today, ending days of demands that pro-Russian rebels release the bodies.
“The equity market seems destined to trend higher,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $120 billion, said by phone. “We think there is still some modest upside if you continue to see earnings rise. The inflation numbers are supportive of higher stock prices. It reflects U.S. economic growth that is neither too slow nor too fast.”
Herbalife Ltd. shares rose a record 25 percent, rebounding from an 11 percent retreat yesterday, as hedge-fund manager Bill Ackman struggled to convince investors that the seller of weight-loss shakes is guilty of fraud.
Chipotle Mexican Grill Inc. jumped 12 percent after reporting earnings and sales that beat analyst projections. Comcast Corp. added 1.5 percent after profit topped estimates on higher revenue from Internet customers. McDonald’s Corp. fell 1.3 percent after earnings fell short of analysts’ estimates.
Profits at S&P 500 members probably rose 6.2 percent in the second quarter, according to analyst estimates compiled by Bloomberg. About 76 percent of S&P 500 companies that have posted results this season have beaten analysts’ estimates for profit, while 67 percent exceeded sales projections.
“It’s the rally no one respects and it continues,” Joe “JJ” Kinahan, chief strategist at TD Ameritrade Holding Corp., said in a phone interview from Chicago. His firm has about $650 billion in client assets. “If we get above 2,000 on the S&P 500, it may force money managers who have been under-invested to maybe invest more.”
Sales of previously owned U.S. homes climbed in June to an eight-month high, a sign the housing market is making more headway. Sales increased 2.6 percent to a 5.04 million annual rate last month, led by gains in all four U.S. regions, figures from the National Association of Realtors showed today.
In Europe, the Stoxx 600 rallied 1.3 percent after a three-day decline. Actelion Ltd. climbed 2.6 percent after the Swiss drugmaker raised its full-year profit forecast. ARM Holdings Plc rose 5.7 percent after the chip designer said royalty revenue growth will accelerate in the second half.
The euro fell 0.4 percent to 136.62 yen. The dollar touched $1.3459 per euro, the strongest level since Nov. 21. The greenback extended gains after U.S. consumer prices rose in June, adding pressure on the Fed to tighten policy while the European Central Bank has introduced unprecedented stimulus.
Zinc climbed to the highest level in almost three years in London as aluminum gained in a bull market amid prospects for more demand and falling stockpiles. Zinc inventories tracked by the London Metal Exchange fell for a 17th day to 656,275 metric tons, the lowest since December 2010, according to bourse data.
Russian shares rose for the first time in seven days amid speculation that recent losses were overdone. The ruble strengthened 0.6 percent against the dollar.
The price to protect Russian bonds against default, already the highest among the world’s four largest emerging markets, has surged since the July 17 tragedy in eastern Ukraine.
In Asia, the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 2.4 percent, the most since March, amid speculation the government will do more to shore up economic growth.
The Tadawul All Share Index jumped 2.8 percent as Saudi Arabia said it will open up its stock market in the first half of 2015, giving foreigners greater access to the Arab world’s biggest bourse.
Indonesian stocks retreated from a 13-month high and the rupiah retreated after presidential candidate Prabowo Subianto said the July 9 election was undemocratic and that he was pulling his witnesses from the counting process. The Jakarta Composite Index closed with a 0.9 percent loss.