By Adam Haigh
Jan. 6 (Bloomberg) -- European stocks rallied for a sixth straight day and U.S. index futures climbed on speculation that government stimulus packages and interest-rate cuts will revive the global economy.
Next Plc, the U.K.’s second-largest clothes retailer, jumped 15 percent after maintaining its full-year profit forecast. Rio Tinto Group, the world’s third-biggest mining company, advanced 8.2 percent as copper rose to a one-month high in London. Samsung Electronics Co., the largest maker of computer memory, increased 4.6 percent in Seoul after benchmark chip prices surged to a six- week high.
Europe’s Dow Jones Stoxx 600 Index has rebounded 17 percent since Nov. 21 as investors speculated that U.S. President-elect Barack Obama will boost the world’s biggest economy with tax cuts. The Federal Reserve has slashed interest rates to as low as zero percent, while the European Central Bank has scope to reduce borrowing costs further after the region’s inflation rate fell to the lowest in more than two years.
“Equities now appear to be regaining a bit of confidence,” said Roger Nightingale, who helps oversee about $1.1 billion as a London-based strategist at Pointon York Ltd. “What is important is what the Fed and central banks are doing. What they have done is create liquidity,” he told Bloomberg Television.
The Stoxx 600 added 2.1 percent to 213.26 at 1:12 p.m. in London. More than five shares rose for every four that fell in the MSCI Asia Pacific Index, which slipped 0.1 percent.
S&P 500 Futures
Futures on the Standard & Poor’s 500 Index increased 0.9 percent. The benchmark index for American equities fell for the first time in four days yesterday on concern that a slump in corporate profits will stretch into 2009.
The U.K.’s FTSE 100 advanced 1.5 percent today as Xstrata Plc climbed, while Germany’s DAX rose 1.7 percent. Japan’s Nikkei 225 Stock Average rallied for a sixth day, gaining 0.4 percent as a weaker yen improved the earnings outlook for Sony Corp.
Global stocks rebounded this year after $1 trillion in credit losses and writedowns at financial firms and the first simultaneous recessions in the U.S., Europe and Japan since World War II sent the MSCI World Index to a 42 percent slump in 2008.
Obama told House Speaker Nancy Pelosi he favors a price tag of about $775 billion for the U.S. economic stimulus plan, according to a Democratic aide. Fed officials are focused on driving down the spreads between U.S. Treasury yields and consumer and corporate loans, after cutting the main interest rate to almost zero failed to revive lending.
Federal Reserve, ECB
Fed Chairman Ben S. Bernanke sees the thawing of frozen credit markets as critical to a recovery, and is determined to try to prevent a second wave of credit distress as the U.S. weathers bad economic news over the next two quarters.
Consumer-price inflation in the euro area slowed to 1.6 percent in December, moving below the ECB’s 2 percent ceiling for the first time since August 2007. Slowing inflation may prompt the ECB to extend a series of interest-rate cuts that already has seen its key rate fall by 1.75 percentage points since early October, council member Vitor Constancio said yesterday.
U.K. retailer Next said its full-year profit forecast remains “in line” with analysts’ estimates after resisting price cuts before the Christmas holiday and clearing inventory from its stores faster than last year. The Leicester, England- based company surged 15 percent to 1,256 pence.
Debenhams Plc, the second-largest U.K. department-store company, soared 27 percent to 36.25 pence after a sales drop slowed on demand for exclusive fashions and debt declined.
U.K. Retailers
British retailers are grappling with a slump in spending as the recession deepens and unemployment rises. U.K. house prices had the biggest drop since at least 1991 last year and consumer confidence slid to the lowest since at least 2004 in December, Nationwide Building Society said today.
In the U.S., reports today may show service industries shrank in December at the fastest pace on record, fewer Americans signed contracts to buy existing homes in November and factory orders fell, according to economists’ estimates.
Rio Tinto added 8.2 percent to 1,876 pence. Xstrata, the world’s fourth-largest copper producer, gained 9.7 percent to 869.5 pence. Copper rallied 6.1 percent in London.
Samsung climbed 4.6 percent to 498,000 won. Hynix Semiconductor Inc., the world’s second-largest computer-memory maker, increased 2.4 percent to 7,390 won.
Prices of the benchmark dynamic random access memory chips rose 1.3 percent, adding to yesterday’s 5.5 percent surge, to the highest since Nov. 21, according to Dramexchange Technology Inc., Asia’s biggest spot market for chips. The benchmark price plunged 62 percent last year.
Sony, Canon
Sony, which gets a quarter of its sales from the U.S., climbed 7.6 percent to 2,120 yen. Canon Inc., which gets a third of its sales from the Americas, added 5 percent to 2,970 yen.
The yen depreciated against the dollar to as much as 93.60, the weakest level since Dec. 8, from 92.03 at the 11 a.m. close of stock trading in Tokyo yesterday. A 1 yen change against the dollar alters Canon’s annual operating profit by 2.6 billion yen ($28 million), the company said in October.
Volkswagen AG surged 15 percent to 293.8 euros after Porsche SE said yesterday it will boost its stake in Europe’s biggest carmaker to more than 50 percent.
Logitech International SA fell 4.2 percent to 17.25 Swiss francs as the world’s largest maker of computer mice withdrew its fiscal 2009 financial targets and said it will cut 15 percent of its salaried workforce because of the deepening global recession.
Metro AG, Germany’s largest retailer, slid 2.7 percent to 29.36 euros after Merrill Lynch & Co. cut its recommendation on the shares to “underperform” from “buy.”
Short-Selling Ban
Royal Bank of Scotland Group Plc declined 2.1 percent to 51.4 pence. The U.K.’s financial regulator said yesterday that RBS and 33 other British financial companies will no longer have protection from short-selling. The temporary ban, introduced in September after politicians and investors blamed the practice for market instability, will expire on Jan. 16, the Financial Services Authority said, adding that it could be reintroduced without consultation if necessary.
An index of companies that the FSA prohibited hedge funds and other investors from shorting declined three times more than the broader FTSE All-Share Index since the ban was instituted on Sept. 18, data compiled by Bloomberg show.
The benchmark index for European options, the VStoxx Index, fell to the lowest level since September, losing 5.2 percent to 39.13. The gauge, which measures the cost of using options as insurance against declines in the Euro Stoxx 50 Index, climbed to 87.51 in October, the highest since at least 2001.
TED Spread
Concern that global stock losses will deepen remains elevated even after falling from record levels in October and November. The Chicago Board Options Exchange Volatility Index, which measures price swings in the S&P 500, has surged 74 percent since the start of 2008 to 39.08.
The difference between what the U.S. government and banks pay to borrow for three months, the so-called TED Spread, is about three times higher than before credit markets started freezing in August 2007, data compiled by Bloomberg show.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Posts
No comments:
Post a Comment