Publications
Partners
Frankfurt - European stocks rose, led by banks and energy companies as oil pared losses, while Treasuries and gold shaved gains.
The Stoxx Europe 600 Index snapped a two-day losing streak as Lloyds surged. US equity-index futures erased an advance. Crude pared its decline, while gold climbed after a slump in Chinese stocks. Treasuries held some gains. The Shanghai Composite Index sank the most in a month as surging money-market rates indicated tighter liquidity in China. South Africa’s rand rose with emerging-market currencies.
While global equities have oscillated in the past week as investors tried to gauge the world economy’s prospects, European and US stock markets are starting to show signs of greater immunity to swings in China. Data that Thursday showed euro-area inflation rose less in January than initially estimated may increase pressure on the European Central Bank to take steps to sustain the region’s recovery.
“With the ECB meeting coming up and people expecting maybe even radical QE, this underpins the market,” said Patrick Spencer, equities vice chairperman at Robert W. Baird & in London. “There’s still a big correlation with oil prices because of the concerns of the knock-on effects on the banking system. It’s still like catching a falling knife, the performance is so fickle at the moment. People are nervous, they expect a recession, but I just don’t see that coming.”
Stocks
The Stoxx 600 benchmark gauge of European equities added 1.9% at 13:22. Lloyds rallied as much as 12% after raising its dividend, introducing a special payout and indicating it may have reached the end of charges for wrongly sold payment protection insurance that cost it £4bn last year.
Total SA and Royal Dutch Shell advanced 2.7% or more, pushing energy shares up for the first time in three days.
Anheuser-Busch InBev NV dropped 1.5% after the brewer’s quarterly earnings missed estimates. Zodiac Aerospace tumbled 22% after forecasting a recovery will take longer than the 18 months initially planned and saying it won’t meet its full-year operating margin target.
Standard & Poor’s 500 Index contracts expiring in March were little changed before data that is forecast to show durable goods orders expanded in January, while initial jobless claims increased in February.
The S&P 500 rebounded late Wednesday after a turnaround in crude-oil prices sparked broader buying. Among companies reporting earnings Thursday, Best Buy and Kohl’s will be in focus for indications of the health of the US consumer.
Emerging markets
Emerging-market stocks erased losses, shrugging off a selloff in China. The MSCI gauge is heading for its ninth retreat in the last 10 months. Still, valuations near the lowest in almost a decade and stability in oil prices are attracting some investors back.
Turkish stocks rose for the third time in four days, leading gains in emerging Europe, while markets in Poland, Hungary and the Czech Republic increased at least 1% each.
Chinese shares traded in Hong Kong dropped the most in two weeks and Shanghai-listed equities tumbled 6.4% as the overnight money rate climbed by the most since the Lunar New Year holiday.
Taiwan’s Taiex rose 1% to its highest close since December 7. Hon Hai Precision Industry climbed 2.6% on the news that its parent, Foxconn Technology Group, will acquire Japan’s Sharp.
Commodities
West Texas Intermediate crude declined 0.7% to $31.93 a barrel, after losing as much as 2.2%. Oil gained 0.9% on Wednesday.
Stockpiles of gasoline in the US fell 2.24 million barrels to 256.5 million, according to the Energy Information Administration, as demand climbed on pump prices near a seven- year low. American crude inventories, however, rose by 3.5 million barrels to an 86-year high of 507.6 million last week.
US natural gas slipped for a third day, extending a decline from a two-month low, amid forecasts for a warmer weather. Futures for March delivery, which expire Thursday, fall as much as 2.7% to $1.73 a million British thermal units on the New York Mercantile Exchange.
Gold extended its biggest monthly advance in four years, on speculation that US interest rates remaining lower for longer.
Zinc rallied to the highest since October on expectations supplies from mines will fall short of demand. The metal for delivery in three months on the London Metal Exchange rose as much as 2.3% to $1 795 a ton. Other industrial metals also climbed.
Wheat for May delivery on the Chicago Board of Trade added as much as 1% to $4.55 3/4 a bushel. It fell to a five- year low on Wednesday on speculation that rains are improving crops in the US, potentially swelling a global glut.
Currencies
The pound halted its steepest decline in more than six years as data confirmed that the UK economy gained momentum at the end of last year.
A gauge of 20 developing-nation currencies added 0.2%, ending a two-day decline. The rand erased losses of as much as 1.1% against the dollar as Finance Minister Pravin Gordhan said his budget is credible enough to avoid a downgrade of the nation’s credit rating. The Mexican peso rose 0.6%.
China’s yuan was little changed in Shanghai even as the central bank weakened the currency’s daily fixing. The offshore yuan fell 0.07% to 6.5399 in Hong Kong, data compiled by Bloomberg show. South Korea’s won slid 0.4%.
Australia’s dollar weakened for a third day, dropping 0.1% to 71.89 US cents, after a government report showed businesses’ annual investment plans fell to the lowest level in nine years.
Bonds
US Treasuries advanced, with the 10-year yield falling one basis point to 1.74%. The nation is due to sell $28bn of seven-year notes on Thursday.
A gauge of inflation expectations in the euro region, which European Central Bank President Mario Draghi has cited in the past, is at the lowest on record. The five-year, five-year forward inflation-swap rate dropped to 1.39% on Thursday, the least on a closing basis since Bloomberg started tracking the data in 2004.
Germany’s 10-year bund yield rose one basis point to 0.16% after touching 0.13% on Wednesday, the lowest level since April.
Japan’s longer-maturity bonds advanced after an auction of two-year notes drew a record-low yield of minus 0.183%. The yield on 40-year debt dropped as low as 0.975% and the rate on benchmark 10-year securities declined to an unprecedented minus 0.065%.
The extra yield investors demand to own emerging-market debt rather than U.S. Treasuries narrowed one basis point to 467, according to JPMorgan indices.
