By Stephen Kirkland and Lynn Thomasson - Jan 3, 2012 9:31 PM GMT+0700
Jan. 3 (Bloomberg) -- Kit Juckes, head of foreign-exchange research at Societe Generale SA, discusses the outlook for currencies in 2012 including the euro, Canadian dollar and Mexican peso. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
Jan. 3 (Bloomberg) -- Pu Yonghao, Hong Kong-based chief investment strategist at UBS Wealth Management, talks about Asia financial markets and economies. Pu also discusses Europe's sovereign debt crisis and the U.S. economy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Jan. 3 (Bloomberg) -- Bill Blain, co-head of the Special Situations Group at Newedge Group Ltd., and Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co in London, discuss Europe's growth prospects in 2012. They speak with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)
Stocks (MXWD) rose, driving the MSCI All- Country World Index to a four-week high, and commodities climbed on signs of increased manufacturing output. The dollar weakened and U.S. Treasuries fell.
The MSCI gauge advanced 1 percent at 9:30 a.m. in New York, on course for the highest close since Dec. 7. The Stoxx Europe 600 Index (SXXP) added 0.8 percent and the Standard & Poor’s 500 Index rallied 1 percent. The Dollar Index fell (DXY) 0.7 percent, while the 10-year Treasury yield increased seven basis points to 1.95 percent. The yield on similar-maturity French debt rose three basis points. Oil rose above $101 a barrel and copper gained for a second day.
U.S. manufacturing probably expanded last month at the fastest pace since June, economists in a Bloomberg survey said before a report today, and the Federal Reserve is scheduled to release minutes from its December meeting. Factory output (AIGPMI) in Australia grew for the first time in six months after reports in the past two days showed a pickup in Chinese and Indian manufacturing, providing evidence that some economies are withstanding Europe’s debt crisis.
“While the reasons to be gloomy are legion and unchanged, there is no new negative news, and lots and lots of cash washing around the system,” Kit Juckes, head of foreign-exchange research at Societe Generale SA in London, said in a report today. “All of which makes for too much cash sitting idly by and a decent risk rally.”
Two-Month High
The Stoxx 600 (SPX) climbed to the highest level in two months as the U.K.’s FTSE 100 Index and the Swiss Market Index, which were closed yesterday for a holiday, led gains in the region. The Euro Stoxx 50 Index of the biggest euro-region companies slipped 0.4 percent.
Rio Tinto Group led a rally in mining companies, gaining 5.4 percent. Afren Plc jumped 14 percent as the U.K. energy explorer focused on Africa said production topped its forecasts.
The MSCI world index (MXWD) sank 9.4 percent last year, the most since 2008, as Europe’s debt crisis hurt global growth. The S&P 500 Index closed the year almost unchanged, slipping less than 0.1 percent.
The Institute for Supply Management’s factory index (NAPMPMI) rose to 53.4 from 52.7 in November, according to the median projection of 63 economists surveyed by Bloomberg. Fifty is the dividing line between growth and contraction. Construction spending increased for a fourth straight month in November, another report may show.
The dollar weakened 0.8 percent to $1.3031 per euro, which appreciated 0.6 percent against the yen after falling to an 11- year low yesterday. The yen depreciated against 14 of its 16 most-traded peers monitored by Bloomberg, while the New Zealand dollar strengthened versus all but two of its major counterparts.
Debt Sales
The 30-year Treasury yield rose eight basis points to 2.98 percent before the U.S. auctions $56 billion of three- and six- month bills.
The German 10-year bund yield was little changed at 1.91 percent. Italian 10-year bonds fell, sending the yield up four basis points at 6.95 percent and Austrian bonds slid, driving the difference in yield (.AUSTGER) with bunds 10 basis points higher to 124 basis points. The French-German spread widened four basis points as France auctions as much as 8.9 billion euros of 84-, 161-and 315-day securities today.
Belgium’s two-year note yield fell two basis points as the government sold almost 2.44 billion euros of three-month and six-month treasury bills, more than it planned, with borrowing costs dropping to an 18-month low.
Default Risk
The cost of insuring against default on corporate and financial bonds fell, with the Markit iTraxx Crossover Index of 50 companies of mostly high-yield credit ratings dropping 13.5 basis points to 741.5, the lowest since Dec. 7, according to JPMorgan Chase & Co. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased nine basis points to 268.
Bank funding costs declined with the three-month cross- currency basis swap, the rate lenders pay to convert euro interest payments into dollars, slipping to 105.5 basis points below the euro interbank offered rate. That’s the lowest cost since Nov. 8, data compiled by Bloomberg show.
Oil in New York jumped 2.6 percent to $101.39 a barrel as Iran’s Deputy Navy Commander Rear Admiral Mahmoud Mousavi told Press TV that any effort to harm the nation’s interests will lead to “reciprocal measures.” Copper advanced 0.9 percent.
The MSCI Emerging Markets Index (MXEF) rose 2.2 percent, set for the biggest advance in a month. The Hang Seng China Enterprises Index (HSCEI) jumped 3 percent as trading resumed in Hong Kong. Benchmark indexes gained more than 2 percent in Russia, India and South Korea.
Hungary sold three-month Treasury bills at 7.67 percent, the highest since August 2009, after lawmakers approved regulations Dec. 30 that reduced powers of the president of the central bank, despite opposition from the International Monetary Fund and the European Union. The BUX Index (BUX) of stocks (MXWD) slid 1.1 percent and the forint weakened 0.1 percent against the euro.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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