BLBG: Stocks Set for Biggest Annual Gain Since 2003; Oil, Copper Rise
By Sandy Hendry and Will Kennedy
Dec. 31 (Bloomberg) -- Stocks rose around the world, set for the biggest annual gain since 2003, and oil and copper headed for their best rallies in at least a decade after China pledged to maintain policies that helped pull the world from recession.
The MSCI World Index climbed 0.3 percent at 10:05 a.m. in London, bringing its 2009 advance to 28 percent. Standard & Poor’s 500 Index futures added 0.2 percent. The dollar dropped against higher-yielding currencies including Australia’s dollar. Treasury futures fell, with bonds heading for the worst performance since at least 1978. The S&P GSCI Index of 24 raw materials rose 0.7 percent, taking its annual gain to 51 percent, the best year since at least 1970.
The governor of China’s central bank, Zhou Xiaochuan, said today he will maintain “moderately loose” monetary policy because 2010 will be “a crucial year in strengthening the stabilization and recovery of the economy and defeating the international financial crisis.” U.S. jobless claims probably stayed below 500,000 for a sixth week, the best performance since 2008, according to a Bloomberg survey of economists before a government report.
“This year has certainly been the year of China, which single-handedly pushed up commodity prices, held up intra- regional trade and benefited its neighbors,” said Daphne Roth, head of Asian equity research in Singapore at ABN Amro Private Banking, which oversees about $21 billion in the region. “We’re still positive on 2010, as there remains a lot of filtering down of fiscal stimulus.”
Low Interest Rates
Stocks worldwide have risen the most since 2003 this year on speculation interest rates near zero and increased government spending will sustain the recovery from the first global recession since World War II. The MSCI World Index plunged 42 percent in 2008, the most in its 40-year history, hurt by the collapse of the subprime-mortgage market in the U.S. and the bankruptcy of Lehman Brothers Holdings Inc.
The U.K.’s FTSE 100 index rose as much as 0.6 percent today, headed for an 22 percent annual increase, the biggest since 1997. France’s CAC 40 climbed 0.6 percent, bringing this year’s gain to 23 percent, the most since 2005.
The MSCI Emerging Markets Index added 0.9 percent for a yearly gain of 75 percent, the biggest since records began in 1988. Russia’s RTS Index added 0.6 percent to this year’s 128 percent rally, the biggest worldwide.
Turkish Bonds
Turkey’s ISE National Index climbed 1.5 percent to the highest level in almost 12 months, while yields on government bonds plunged the most since 2004, after politicians who attended a meeting with Prime Minister Recep Tayyip Erdogan said the nation is close to signing a loan agreement with the International Monetary Fund. Separately, the Referans newspaper said the country will cut taxes on bond income for domestic investors.
Asian companies cemented their position among the world’s biggest by market value. PetroChina Co.’s 41 percent advance this year makes China’s largest oil company the most valuable, and Industrial & Commercial Bank of China Ltd. is ranked fourth after Exxon Mobil Corp. and Microsoft Corp., following the lender’s 56 percent climb this year. PetroChina climbed 0.9 percent today and ICBC gained 1.4 percent. The Shanghai Composite Index rose 80 percent this year.
Dollar Falls
The dollar fell 0.6 percent to $1.4419 per euro, bringing its decline this year to 3.1 percent. Australia’s dollar climbed 0.6 percent to 89.96 U.S. cents and added 0.4 percent to 83.03 yen. The so-called Aussie strengthened against 14 of its 16 most-traded counterparts this year as raw-materials prices gained. New Zealand’s dollar, another so-called commodity currency, gained 0.7 percent.
Commodities and the currencies of raw-materials producers have rebounded this year as China’s economic rebound sucks in imports of industrial metals and energy. Gross domestic product will grow 8.5 percent this year, topping the government’s 8 percent target, economists forecast, after the government revised higher its data for 2008 and 2009.
Oil rose for a seventh day, the longest gaining streak since October, as colder weather in the U.S. increased demand for heating fuels. Crude oil for February delivery rose as much as 0.7 percent to $79.85 a barrel. Futures are set for a 78 percent advance this year, the most since 1999, and have tripled during the past decade.
Copper Gains
Copper rose as much as 1.2 percent in London to $7,415 a metric ton, doubling this year for the biggest increase in more than two decades. Gold for immediate delivery rose 0.9 percent to $1,102 an ounce, taking this year’s advance to 24 percent, a ninth straight annual gain.
The yield on 10-year Treasury futures contracts for March delivery rose 1 basis point to 4.07 percent. The yield on the benchmark note climbed to as high as 3.82 percent yesterday, approaching the 3.86 percent reached on Dec. 29, the highest level since Aug. 10. It has increased 1.58 percentage points this year.
President Barack Obama is borrowing unprecedented amounts for programs to revive the economy. U.S. marketable debt increased to a record $7.17 trillion in November, from $5.80 trillion at the end of last year. U.S. securities have fallen 3.5 percent this year, the most among Group of Seven countries, according to Bank of America Merrill Lynch indexes.
To contact the reporters on this story: Sandy Hendry in Hong Kong at shendry@bloomberg.net; Will Kennedy in London at wkennedy3@bloomberg.net.
