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London - Stocks rose around the world, buoyed by rising commodities prices, and the dollar weakened before central bank policy meetings this week.
The Stoxx Europe 600 Index gained the most in more than two weeks. Crude rebounded from a one-month low as fighting disrupted supplies from Libya, boosting the currencies of oil-exporting nations.
Yuan borrowing costs in Hong Kong soared amid speculation China’s central bank was intervening to fend off bearish currency bets. Hungary’s stocks and bonds advanced after the nation was raised to investment grade by S&P Global Ratings.
Major oil producers will meet next week in Algiers to discuss cooperating to shore up prices amid a global oversupply that has hurt state budgets. Before that, the Bank of Japan (BoJ) will undertake a review of its monetary policy and the Federal Reserve will meet to determine whether to raise rates.
Volatility has picked up in financial markets over the past two weeks amid concern central banks are becoming reluctant to loosen monetary policy, while at least three bombs discovered in New York and New Jersey over the weekend may increase political turmoil.
“Sentiment is being boosted by a rebound in oil,” said Vasu Menon, vice president for wealth management research at Oversea-Chinese Banking in Singapore.
“Investors are also hoping the BOJ will do something more dramatic though I don’t think that’s going to make a lot of difference. With inflation numbers picking up a little bit in the US, the market will start worrying about the Fed again at some stage down the road.”
The MSCI All-Country World Index climbed 0.5% at 11:27 in London as US crude added 1.5% to $43.66 a barrel. The Bloomberg Dollar Spot Index declined 0.3%.
Stocks
The Stoxx Europe 600 Index climbed 1% after its biggest weekly slide in three months. Rio Tinto Group and BHP Billiton rose at least 2.8%, contributing the most to gains among miners. Total and BP led oil-related stocks higher. Weir added 3.9% after JPMorgan recommended buying shares of the maker of fracking pumps for oil companies, citing improving prospects.
UK builders gained, with Barratt Development and Berkeley adding 1.2% or more, as a report showed London house prices rebounded from their post-Brexit drop in September.
HSBC led a rebound in banks. Deutsche Bank, which sparked a selloff on Friday after rebuffing a US Justice Department claim to settle a probe tied to mortgage-backed securities, bucked the trend on Monday, with a 1.5% drop.
S&P 500 Index futures added 0.5%, indicating US equities will recover from Friday’s 0.4% retreat.
Emerging-market shares and currencies rallied with developed markets, led by a 2.8% gain in Taiwan’s Taiex Index and a 0.8% advance in Taiwan’s dollar. HTC surged 10% in Taiwan, the biggest gain since May 25, on reports the company will unveil a new mobile-phone handset.
The MSCI Emerging Markets Index rose 1.3%, heading for the biggest one-day gain in almost two weeks.
Commodities
Oil rose as renewed clashes halted what would be the first crude shipment from one of Libya’s largest export terminals since 2014. The tanker Seadelta suspended loading after fighting started Sunday between local Petroleum Facilities Guard units and forces loyal to eastern-based military commander Khalifa Haftar. Brent added 1.2% to $46.33.
OPEC may call an extraordinary meeting if ministers reach consensus at an informal gathering next week, Secretary General Mohammed Barkindo said, according to Algerian Press Service.
Nickel rebounded from the biggest weekly slump in ten months after the Philippines said more mine closures were possible. The metal used in stainless steel gained 1.7% to $9 890 a metric ton.
Copper dropped 0.8%, declining from a four-week high as Anglo American restarted operations after a strike at its Los Bronces mine in central Chile, bolstering supply from the world’s largest producer. Gold climbed 0.3% to $1 314.83 an ounce and silver jumped 1.8%.
Currencies
The Bloomberg Dollar Spot Index fell back after a 0.7% advance on Friday, when data showed the US consumer-price index climbed 0.2% after being little changed in July. Economists predicted a 0.1% increase, a Bloomberg survey showed. The Japanese yen gained 0.4% and the pound rose 0.4%.
Australia’s dollar strengthened 0.7% versus the greenback, buoyed by the pickup in oil prices and the $7.3bn sale of a 50-year lease in Australia’s busiest port to a group of global investors. Among the currencies of other crude-exporting nations, the Mexican peso and the Canadian dollar rose at least 0.4%, while the Norwegian krone was up 0.3%.
The offshore yuan was one of the few currencies to lose ground against the dollar, weakening 0.3% to 6.6702 per dollar. Its overnight borrowing costs in Hong Kong almost tripled to 23.7% on Monday, spurring speculation China was mopping up liquidity to deter bets on depreciation before the yuan joins the International Monetary Fund’s basket of reserve currencies next month.
“The result is to support the currency at a time when 6.70 suddenly seems a very important line in the sand,” said Michael Every, Hong Kong-based head of financial markets research for Asia-Pacific at Rabobank. “You’d almost think it was a pegged currency.”
Bonds
The yield on Treasuries due in a decade was little changed at 1.70%. It erased a three basis point decline on Friday following the release of the American inflation data, which boosted the probability of an interest-rate hike this year by five percentage points in the futures market to 55%.
European bonds advanced, with Spanish and Italian securities leading gains. The yield on 10-year Spanish bonds slipped two basis points to 1.06%, while that on similar-maturity Italian debt fell one basis point to 1.33%, after adding nine basis points last week.
Portugal’s 10-year bond yield was steady at 3.43%, after surging 26 basis points last week. The nation’s debt rating was affirmed on Friday by S&P, which forecast the economy will lose momentum this year.
Hungarian five-year credit-default swaps declined four basis points to 123, the lowest since March 2015. The yield on the 10-year government bond fell nine basis points to 2.86%, the lowest in three weeks on a closing basis.
After S&P’s upgrade on Friday, Hungary is now ranked above junk at two agencies, making it possible for funds that can only buy investment-grade debt to start piling into the country.
