By Claudia Carpenter and Rita Nazareth - Dec 20, 2011 9:41 PM GMT+0700
Dec. 20 (Bloomberg) -- Builders broke ground in November on the most houses in over a year, led by a three-year high on work in multifamily units. Starts increased 9.3 percent to a 685,000 annual rate, the highest level since April 2010, Commerce Department figures showed today. Building permits, a proxy for future construction, also climbed to a more than one-year high. Michael McKee and Lisa Murphy report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Dec. 20 (Bloomberg) -- Binay Chandgothia, Hong Kong-based portfolio manager at Principal Global Investors, talks about the European debt crisis and its implications for global stock markets and banking industry. Chandgothia speaks with John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)
Stocks rallied, with the Standard & Poor’s 500 Index rebounding from its lowest level of the month, and Treasuries fell as U.S. housing starts topped economists’ estimates and German business confidence unexpectedly grew.
The Standard & Poor’s 500 Index climbed 2 percent to 1,229.69 at 9:39 a.m. in New York and the Stoxx Europe 600 Index rose 1.3 percent. Spain’s government bonds stayed higher as the nation sold 5.64 billion euros ($7.4 billion) of Treasury bills. The yield on the 10-year U.S. Treasury note advanced six basis points to 1.87 percent, with the dollar weakening versus all 16 of its most-traded peers. Oil gained 3 percent and the GSCI index of 24 commodities climbed for a second day.
U.S. builders broke ground in November on the most houses in over a year, a sign that the market is stabilizing heading into 2012. Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow at least 2 percent next year. German business confidence unexpectedly rose for a second month in December, according to the Ifo institute.
“It looks like our economy is doing pretty good despite the challenges of Europe,” said Michael Strauss, who helps oversee about $27 billion of assets as chief investment strategist at Commonfund in Wilton, Connecticut. “We’re seeing better economic news and the housing report fits right in line with that. The data provides confirmation that the surprise may be that housing is a pretty good contributor to economic activity. It’s another piece of news that’s helping the stock market.”
Housing Starts
The S&P 500 rebounded after yesterday’s 1.2 percent loss. Housing starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the highest level since April 2010, Commerce Department figures showed. Building permits, a proxy for future construction, also climbed to a more than one-year high.
Jefferies Group Inc. (JEF), the investment bank battling speculation about its financial strength, rallied after earnings topped analysts’ estimates.
About five shares advanced for every one that declined in the Stoxx 600. Bayerische Motoren Werke AG and Daimler AG led gains among automakers, rising more than 3 percent.
The German Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 107.2 from 106.6 in November, the Munich-based institute said. Economists had expected a drop to 106, the median forecast of 36 economists in a Bloomberg survey showed.
Fresenius Medical
Health-care shares limited gains in Europe as AstraZeneca Plc, the U.K.’s second-biggest drugmaker, slid 2.3 percent after saying earnings will be at the low end of its forecast following research setbacks. Fresenius Medical Care AG slipped 1.3 percent as the world’s largest provider of kidney dialysis cut its full- year revenue forecast.
Per-share earnings at health-care companies in the Stoxx 600 are forecast to grow 1.7 percent in 2012, compared with an increase of 9.8 percent for the index as a whole, according to analyst estimates compiled by Bloomberg.
The five-year Treasury note yield increased three basis points before the government auctions $35 billion of the securities. The yield on Germany’s 10-year bund rose seven basis points, while similar-maturity Italian yields slid 23 basis points to 6.61 percent.
Spain’s 10-year bond yields were 11 basis points lower at 5.07 percent and two-year note yields were nine basis points lower at 3.28 percent.
The nation sold 5.64 billion euros of three-month and six- month bills, the Bank of Spain said, compared with a maximum target of 4.5 billion euros the Treasury had set for the sale.
Commodities
Oil for January delivery climbed 3 percent to $96.69 a barrel. U.S. crude inventories dropped 2 million barrels last week, according to the median of seven analyst estimates before today’s weekly Energy Department report. The GSCI index jumped 2 percent, as Brent crude, heating oil, cocoa, aluminum and gasoline climbed more than 1.9 percent.
The euro strengthened 0.9 percent to $1.3112. Australia’s dollar climbed 1.5 percent against the greenback after minutes of the central bank’s last meeting showed policy makers saw a continued expansion in the domestic economy even as Europe’s debt crisis weighs on global economic growth.
Sweden’s krona appreciated against the dollar and the euro even as the nation’s central bank lowered its main rate for the first time since 2009 to protect the economy from the debt crisis.
The MSCI Emerging Markets Index (MXEF) rose 0.9 percent. The Kospi Index climbed 0.9 percent in Seoul, rebounding from a 3.4 percent slide yesterday, and the won strengthened 1.5 percent against the dollar. South Korea’s National Pension Service, the nation’s biggest investor, said it bought stocks yesterday after the death of North Korean leader Kim Jong Il spurred some investors to sell on concern the leadership transition may lead to conflict on the peninsula. Moody’s Investors Service and S&P said Kim Jong Il’s death is unlikely to affect South Korea’s credit rating.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net
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