BLBG: Stocks Rise as U.S. Earnings Beat Forecasts; Copper, Oil Gain
By Stuart Wallace
Feb. 3 (Bloomberg) -- Stocks advanced, pushing the MSCI Emerging Markets Index to its biggest gain in two months, on speculation U.S. earnings reports suggest the global recovery is gathering pace. Copper and oil climbed for a third day.
The MSCI World Index of 23 developed nations’ stocks rose 0.3 percent at 10:03 a.m. in London and the emerging markets index added 1.7 percent, its steepest advance since Dec. 1. Futures on the Standard & Poor’s 500 Index gained 0.2 percent. Copper advanced 1.7 percent and crude oil 0.8 percent. The dollar declined against 15 of the 16 most-traded currencies.
A nine-quarter earnings slump for S&P 500 companies is projected to have ended in the final three months of 2009, and about 81 percent of earnings since Jan. 11 beat the average of Wall Street estimates, according to data compiled by Bloomberg. Service industries in the U.S. probably expanded in January at the fastest pace in more than a year, economists said before a report today.
“While investors have been a bit cautious over the course of the past two weeks, they should continue to focus on the corporate profitability picture that is rebounding fast,” said Henk Potts at Barclays Stockbrokers Ltd. in London, which oversees about $218 billion. “Monetary tightening may drive the market into a bumpier road in the second half, but it should not be a matter of concern for at least the first half.”
European Gains
Europe’s Dow Jones Stoxx 600 Index gained 0.4 percent. Scania AB surged 9 percent in Stockholm after the Swedish truckmaker posted results that beat analysts’ estimates. Rival MAN AG jumped 5.3 percent in Frankfurt. Standard Life Plc, Scotland’s biggest insurer, added 4 percent after saying 2009 revenue fell less than analysts predicted. Gains were limited as Electrolux AB, the world’s second-biggest appliance maker, plunged 13 percent in Stockholm, the biggest drop in three years, after earnings missed estimates.
The MSCI Asia Pacific Index advanced 1.3 percent, posting its first back-to-back advance in three weeks. Esprit, the biggest Hong Kong-listed clothier, gained 7.9 percent after posting better-than-estimated profit. China’s Shanghai Composite Index climbed 2.4 percent and India’s Sensex Index advanced 2 percent, with both gauges headed for the steepest gains in six weeks, led by information technology and industrial shares.
Commodity producers led gains in Europe, with Russia’s Micex Index climbing 1.2 percent and Kazakhmys Plc, Kazakhstan’s largest copper producer, increasing 2.4 percent after it was given a new “buy” rating by UBS AG.
Greek Securities Rally
Greek stocks and bonds rose after European Commission President Jose Barroso said the commission will endorse the nation’s deficit-reduction program in an assessment to be published today. The benchmark ASE Index advanced 2 percent as National Bank of Greece SA added 4.9 percent and Alpha Bank SA climbed 4.8 percent.
Greece’s two-year note jumped, with the yield falling 23 basis points to 6.29 percent. Credit-default swaps on Greek government bonds fell 7 basis points to 380, according to CMA DataVision, meaning it costs $380,000 a year to insure against losses on the debt for five years.
The gain in U.S. futures indicated the S&P 500 may add to yesterday’s 1.3 percent advance and extend its biggest two-day rally since October. The measure has surged 63 percent since March as governments and central banks around the world sought to encourage growth by maintaining low interest rates and committing more than $12 trillion to stimulate the economy.
Service Industries
The Institute for Supply Management’s index of non- manufacturing companies, which make up almost 90 percent of the U.S. economy, rose to 51 from 49.8 in December, according to the median estimate of 75 economists surveyed by Bloomberg News. The report is due at 10 a.m. in New York. Readings above 50 signal growth.
A separate report at 8:15 a.m. may show companies last month shed the fewest workers in two years. Figures from ADP Employer Services may show private employers cut 30,000 jobs in January, according to the median estimate of economists.
U.S. joblessness threatens to undermine stocks, according to Mohamed A. El-Erian, Chief Executive Officer of Pacific Investment Management Co. “I sense quite a gap between consensus market expectations and key political and economic realities, especially in the U.S.,” El-Erian wrote in a Bloomberg News column. “If the gap isn’t bridged by the validation of the more optimistic expectations, investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes.”
Oil, Copper Advance
Crude oil for March delivery in New York rose 72 cents to $77.95 a barrel, extending yesterday’s 3.8 percent jump. Copper for delivery in three months added $119 to $6,934 a metric ton on the London Metal Exchange, leading gains in metals. Gold for immediate delivery rose 0.7 percent to $1,122.63 an ounce.
Improving economic data is “very good news for assets that are sensitive to growth, such as commodities and equities,” said Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London.
The dollar weakened 0.4 percent against the euro and 0.1 percent compared with the yen. The South Korean won advanced against all 16, strengthening 0.9 percent versus the dollar and 0.8 percent compared with the yen.
Commodity producing nations led exchange-rate gains, with the Russian ruble gaining 0.7 percent to a two-week high against the dollar and South Africa’s rand strengthening 0.8 percent.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
