Global Stocks Rise With Metals on Growth Optimism; Oil Climbs

  • Investor confidence in U.S., Chinese economies is improving
  • Energy, Material Companies Post Biggest Gains in S&P 500

Inside the Bond and Equities Markets

Stocks rose around the world as data showing strength in the American consumer boosted confidence in the U.S. economy, while signs of stabilization in China sent industrial metals and oil higher as the worst commodities rout since the financial crisis eased.

The Standard & Poor’s 500 Index pushed its three-day rally to 2.9 percent, as a gauge of the most shorted companies rallied. Trading was subdued before the year-end holidays. Treasuries fell on speculation the economy can withstand tighter monetary policy. West Texas Intermediate advanced a third day following U.S. supplies data.

An increase in consumer purchases in November was accompanied by rising wages and scant inflation, adding to evidence the biggest part of the U.S. economy will continue to underpin growth. In China, early indicators in December are showing more signs of stabilization as leaders say they’ll do more to bolster the expansion. Oil’s rebound from a six-year low boosted shares in energy producers that have been beaten down this year.

“The huge rebound in some oil and basic-material stocks really fuels the rally today and people are buying the laggards of this year.” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “It’s usual for the market to go higher the day before Christmas holidays, and the volumes are very thin so you can easily move the market.”

Stocks

The S&P 500 climbed 1.2 percent at 4 p.m. in New York. The index trimmed its decline in December to 0.8 percent and erased its decline for the year.

A Goldman Sachs Group Inc. index of 50 stocks with the highest short interest jumped 2.6 percent to the highest level in more than two weeks, as energy and raw material producers rallied. Freeport-McMoRan Inc. jumped 16 percent to cuts its rout in 2015 to 68 percent.

“The gains in oil and materials are certainly helping the market dig itself out of the hole that it’s created for itself,” said Peter Jankovskis, co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC. “Consumer spending looks good and it bodes well for the economy going forward. Hopefully we’ll have that Santa rally that everyone is waiting for.”

Trading on U.S. exchanges was 13 percent below the three-month average on Wednesday. U.S. exchanges will close early on Thursday for the Christmas holiday and reopen on Dec. 28. Some European markets are closed on Thursday, while others have shorter trading days. Most will reopen Monday, while U.K. markets do so on Dec. 29.

The Stoxx Europe 600 Index added 2.7 percent, as all 19 industry groups advanced. Miners and energy shares led gains in Europe, with ArcelorMittal gaining 11 percent. Royal Dutch Shell Plc rose 5.5 percent after announcing further cuts in spending.

Commodities

West Texas Intermediate February futures climbed 4.7 percent to $37.84 a barrel in New York. On Tuesday it rose to a premium over Brent for the first time since January on speculation the U.S. decision this month to end a 40-year ban on exports may ease the nation’s oversupply. Crude supplies fell 5.88 million barrels last week, the biggest drop since June, government data showed.

The commodity is heading for a second yearly loss on signs a global glut will be prolonged after the Organization of Petroleum Exporting Countries effectively abandoned output limits at a meeting earlier this month. Brent, the benchmark for more than half the world’s crude, is poised to end 2015 with the lowest annual average price in 11 years.

Industrial metals rallied after a report Tuesday showed the U.S. economy expanded faster than estimated, boosting demand in the second-largest metals user. Aluminum climbed to the highest level since October on the London Metal Exchange, while zinc added 2.5 percent. The LME index of six industrial metals has fallen 24 percent this year, heading for the biggest drop since 2008.

Emerging Markets

The MSCI Emerging Markets Index climbed for a third day as energy companies rallied with oil, gaining 1.1 percent, with all industry groups advancing. Equity gauges in Thailand, Malaysia, India, Russia and Turkey rose at least 1 percent.

A gauge tracking 20 emerging-market currencies added 0.4 percent for a fourth straight advance. The ruble climbed 2.1 percent. Indonesia’s rupiah strengthened for a fifth day, set for its longest rally since December 2014, after local media Investor Daily reported the nation will cut regulated fuel prices in January.

Currencies

The euro fell versus the dollar for the first time in four days, leaving the shared currency on course for a second year of losses, as diverging policies at the two economies’ central banks drive foreign-exchange markets. 

The common currency slid 0.4 percent to $1.0919. The Bloomberg Dollar Spot Index was little changed, after earlier climbing as much as 0.2 percent. The gauge is on course for a 0.6 percent drop this month as traders bet the Federal Reserve will wait until at least April to raise interest rates again.

Bonds

U.S. 10-year Treasuries fell, with yields increasing two basis points to 2.26 percent. The Securities Industry and Financial Markets Association recommends an early close for U.S. bond markets Thursday and a full closure on Friday for Christmas.

U.S. government securities have returned 1 percent this year, based on Bloomberg World Bond Indexes. Treasuries are still eking out a gain even after the Fed raised interest rates last week amid signs of uneven U.S. economic growth.

The yield on similar-maturity German bonds rose two basis points to 0.62 percent, while that on U.K. gilts added six basis points to 1.94 percent.

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