By Stephen Kirkland and Lynn Thomasson - Jan 10, 2012 9:31 PM GMT+0700
Jan. 10 (Bloomberg) -- Chen Li, head of China equity strategy at UBS AG, talks about the nation's stock and real estate markets. He spoke yesterday in Shanghai with Bloomberg Television's Stephen Engle. (Source: Bloomberg)
Jan. 10 (Bloomberg) -- Paul Hickey, co-founder of Bespoke Investment Group, talks about Alcoa Inc.'s fourth-quarter loss and the outlook for U.S. corporate earnings. Alcoa's net loss was $191 million, or 18 cents a share, compared with net income of $258 million, or 24 cents, a year earlier, the New York-based company said yesterday in a statement. He speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Jan. 10 (Bloomberg) -- Benjamin Pedley, head of investment strategy for North Asia at HSBC Private Bank, talks about global financial markets and his investment strategy. He also discusses the U.S. economy, Australia's economy and central bank monetary policy, and Europe's sovereign debt crisis. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Stocks (MXWD) rallied and commodities rose for a third day amid speculation China may act to spur growth, while better-than-forecast revenue at Alcoa Inc. (AA) bolstered optimism at the start of the U.S. earnings season. The euro gained before leaders meet. Treasuries and German bunds fell.
The MSCI All-Country World Index (MXWD) added 1.2 percent at 9:30 a.m. in New York and the Standard & Poor’s 500 Index increased 0.67 percent. The Shanghai Composite Index (SHCOMP) jumped 2.7 percent for its biggest three-day advance in 15 months. The euro strengthened 0.2 percent to $1.2786. The yield on the 10-year German bund gained four basis points, as the rate on 10-year Treasury notes increased three basis points. The S&P GSCI (SPGSCI) gauge of 24 commodities climbed 1 percent.
China’s import growth fell to a two-year low in December, government trade data showed today, underscoring an economic slowdown that bolstered forecasts for monetary easing. International Monetary Fund Managing Director Christine Lagarde and German Chancellor Angela Merkel are scheduled to discuss Greece at a meeting today. Laszlo Birinyi, whose prediction the bull market would weather a five-month retreat came true in October, says U.S. stocks (MXWD) will keep climbing in 2012.
“Policy makers in Beijing are very much focused on downside risks,” said Andrew Pease, a Sydney-based senior investment strategist for the Asia-Pacific region at Russell Investment Group, which oversees $137.6 billion of assets. “It would be a reasonable expectation that there’s a lot of monetary easing to come in the first half of the year.”
The Stoxx Europe 600 Index advanced 1.8 percent as Bayerische Motoren Werke AG led automakers higher. Debenhams Plc, the U.K.’s second-largest department-store chain, rallied 12 percent after reporting holiday sales that beat analyst estimates. Larger rival Marks & Spencer Group Plc climbed 3.1 percent as revenue increased.
Profit Drops
Royal Philips Electronics NV (PHIA) sank 3 percent, the most since September. The world’s biggest maker of light bulbs said fourth- quarter profit dropped by about 45 percent, held back by sluggish demand for health-care equipment in Europe. Software AG, Germany’s second-largest software maker, plunged 21 percent for the biggest drop in almost a decade after earnings and sales missed analysts’ estimates.
Alcoa, the biggest U.S. aluminum producer and first company in the Dow Jones Industrial Average to report results for the fourth quarter, had a fourth-quarter loss excluding restructuring costs of 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg. Sales rose 6 percent to $5.99 billion, topping the $5.7 billion estimate in a Bloomberg survey.
Improving Sentiment
“The sentiment in the markets improved as the earnings season kicked off,” said Anita Paluch, a senior sales trader at Gekko Global Markets Ltd. in London. That’s “shifting the attention from the European troubles for a while.”
U.S. equities will advance at least 8 percent as improving corporate profits force bears to capitulate, according to Birinyi, who manages $400 million in Westport, Connecticut.
The MSCI Emerging Markets Index (MXEF) advanced 2 percent. The Shanghai Composite Index climbed 6.4 percent in three days. Benchmark gauges in Brazil, Russia, India, Poland, Turkey, South Korea and Taiwan climbed more 1 percent.
Oil in New York jumped 1.8 percent to $103.15 a barrel, the first increase in four days, and copper advanced 2.6 percent. Imports of the metal by China, the world’s biggest buyer of copper, surged to a record. Aluminum climbed as much as 2 percent to $2,150 a ton, the highest since Dec. 2.
Dollar Weakens
The euro appreciated 0.2 percent versus the yen. The dollar weakened against higher-yielding currencies including the New Zealand and Australian dollars. The dollar depreciated 0.9 percent against the so-called Aussie, and weakened 1 percent versus New Zealand’s currency.
The yield on the 10-year U.S. Treasury note increased three basis points to 1.99 percent. The government sells $32 billion of three-year notes, the first of three bond auctions this week totaling $66 billion.
The yield on the Dutch 10-year bond rose two basis points to 2.25 percent. The Netherlands sold 3.105 billion euros of 0.75 percent debt due April 2015 at an average yield of 0.853 percent in an auction today.
Austrian (GAGB10YR) 10-year yields declined six basis points as the government issued 1.32 billion euros of securities maturing in September 2016 and April 2022, with the average yield on the 2022 debt at 3.322 percent, down from 3.528 percent in July.
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: Michael P. Regan at mregan12@bloomberg.net
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