Global Stocks Climb on China Stimulus Bets; Gold SlidesJeremy Herron and Andrew Reierson
Corporate mergers and optimism that central banks will boost stimulus to support growth sent stocks higher around the world. The dollar strengthened, while gold slid the most in three weeks.
The Standard & Poor’s 500 Index climbed 1.2 percent by 4 p.m. in New York, capping its first two-day rally since Feb. 17 and extending a ninth quarterly gain. The Stoxx Europe 600 Index rose 1.1 percent, headed for its best quarter since 2009, while the MSCI Emerging Markets Index rebounded. The Bloomberg Dollar Spot Index rose 0.7 percent, advancing for a third day. U.S. crude slipped 0.4 percent, while gold sank 1.3 percent.
China can do more to support growth in the world’s second-largest economy, the central bank governor said Sunday. Federal Reserve Chair Janet Yellen said Friday she expects U.S. interest rates to rise this year, with subsequent increases to be gradual. Horizon Pharma Plc rose 18 percent after saying it will acquire Hyperion Therapeutics Inc., while Catamaran Corp. jumped 24 percent after UnitedHealth Group Inc. agreed to buy it.
“There was the China central bank comment about stimulus overnight, the economic news this morning was a little bit mixed, and it seems people are putting cash to work thinking maybe earnings are going to come in better than expected,” Larry Peruzzi, the Boston-based director of international trading at Cabrera Capital Markets LLC, said by phone. “The biggest thing in today’s market is there’s no huge negative.”
Coupled with Friday’s 0.2 percent increase, the S&P 500 posted its first back-to-back gain after a 28-day drought, the longest run since 1994. The S&P 500 has declined 0.9 percent in March, paring its quarterly climb to 1.3 percent. The last decline came in the final three months of 2012.
Merger news drove advances in U.S. equities Monday, with UnitedHealth’s 2.5 percent gain pushing the Dow Jones Industrial Average up 1.5 percent, the most since Feb. 3.
Catamaran soared after UnitedHealth’s OptumRx said it will buy the provider of pharmacy-benefit management services. Horizon Pharma is acquiring Hyperion Therapeutics Inc., while Teva Pharmaceutical Industries Ltd. is buying Auspex Pharmaceuticals Inc.
Energy shares rallied 2.1 percent to lead gains as all of the S&P 500’s 10 primary industry groups advanced. JPMorgan Chase & Co. climbed 2.4 percent as banks rose.
Company profits probably shrunk by 5.8 percent in the first three months, according to analyst estimates compiled by Bloomberg. Alcoa Inc. unofficially kicks off the earnings season when it reports first-quarter results on April 8.
Investors are parsing economic data this week for clues on the timing of the Fed’s first rate increase since 2006. A report showed consumer purchases rose less than projected in February, indicating the biggest part of the U.S. economy will find it hard to sustain momentum after the best quarter since 2006. Separately, more Americans than forecast signed contracts to purchase previously owned homes in February. Other data this week may show payrolls rose at a slower pace.
The U.S. economy grew at a slower rate in the fourth quarter than economists had estimated, Commerce Department data showed on Friday.
“The big question in the U.S. right now is whether the growth slowdown in the numbers we’ve seen is real,” said Henrik Drusebjerg, who helps manage about $17 billion as chief strategist at Carnegie Investment Bank AB in Copenhagen. “Going forward, the macro numbers won’t be bad but the positive surprise also won’t be there. The timing of the Fed is also extremely important.”
Banks and health-care stocks contributed the most to the Stoxx 600’s advance on Monday. Novartis AG climbed 1.7 percent after saying it entered into a multi year collaboration with Aduro Biotech Inc.. Roche Holding AG rose 1 percent.
The European equity gauge has advanced 17 percent this quarter, the most since 2009.
The euro weakened 0.5 percent to $1.0833 after gaining 0.6 percent last week, as Greece sought to persuade creditors to accept proposed economic reforms and release financial aid before it runs out of funding.
The dollar climbed versus all but one of its 16 major counterparts, rising most against the Australian and New Zealand currencies. Bloomberg’s dollar index, which tracks the greenback against 10 major peers, was set for a ninth straight monthly gain.
The MSCI Emerging Markets Index climbed 1.1 percent, the most since Feb. 13, to be headed for the first quarterly rally since June. The Shanghai Composite Index jumped to a seven-year high Monday, capping a 17 percent gain so far in 2015.
China has room to act with both interest rates and “quantitative” measures, People’s Bank of China chief Zhou Xiaochuan said in remarks at the Boao Forum for Asia, an annual conference on the southern Chinese island of Hainan. Analysts surveyed by Bloomberg expect the PBOC will lower both benchmark lending rates and banks’ required reserve ratios, adding to cuts made in recent months.
West Texas Intermediate for May delivery fell 0.4 percent to settle at $48.68 a barrel in New York, after sinking 5 percent on Friday to trim its weekly gain to 6.9 percent. Brent for May settlement lost 0.2 percent to $56.29 a barrel in London.
Talks on Iran’s nuclear program resumed Monday amid speculation a deal to ease sanctions may mean a resumption of oil shipments. Iran, the fifth biggest producer of the group, could increase exports by 1 million barrels a day if international sanctions were lifted, Oil Minister Bijan Namdar Zanganeh said March 16.
Oil fell almost 50 percent last year as the Organization of Petroleum Exporting Countries resisted calls to cut output to maintain market share amid surging U.S. supply.
Gold futures for June delivery dropped 1.3 percent to finish at $1,185.30 an ounce, the biggest drop since March 6. The metal halted its longest run of daily gains since August 2012 on Friday.
Copper futures rebounded from a one-week low on expectations of expanded stimulus in China, the world’s biggest consumer of industrial metals. The metal for May delivery climbed 0.5 percent to settle at $2.7815 a pound in New York.