Oil Leads Commodity Gains Amid Stimulus Bets; S&P 500 Fluctuates.
Oil led a rally in higher-yielding assets, as emerging-market equities advanced with industrial metals, on rising optimism that the U.S. economy and central-bank stimulus will power global growth. American shares fluctuated near all-time highs.
Crude climbed 2.8 percent in New York after OPEC’s president predicted the current bear market will be short-lived and after the release of better-than-estimated American payrolls data on Friday bolstered appetite for riskier assets. Global equities were on pace for the highest level in a year, led by shares in developing nations, as U.S. stocks fluctuated after rallying to a record high. Copper and nickel climbed with metals. Treasury 10-year note yields held close to a four-month high versus their Group of Seven peers.
Investors have pushed up the value of high-yielding assets as data showing improvements in Amrican employment and retail sales bolstered confidence the world’s biggest economy will withstand faltering growth elsewhere. While traders have brought forward their bets for a Federal Reserve interest-rate increase, policy makers are still expected to only move gradually when they resume raising borrowing costs
“Overall, the U.S. economy seems to be reasonably robust for now,” said Frances Hudson, an Edinburgh-based strategist at Standard Life Investments. Her firm manages about 253 billion pounds ($331 billion). But “the global growth picture is not,” she said. “So though we see this talk of the health of the U.S. economy, the Fed is not entirely focused on the U.S.”
West Texas Intermediate crude oil gained to $42.96 a barrel at 11:23 a.m. in New York. Members of the Organization of Petroleum Exporting Countries are in “constant deliberations” on stabilizing the market and oil prices are expected to rise in the latter part of 2016, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said in a statement on the group’s website.
Copper added 0.6 percent in London and nickel rallied. Gold fell 0.2 percent extending Friday’s losses. The prospect of higher U.S. interest rates dim the appeal of the precious metals versus yield-paying assets.
The MSCI All Country World Index added 0.3 percent, extending a three-day advance. The S&P 500 fluctuated as a decline in health-care and consumer companies offset gains in energy shares. A measure of emerging-market stocks rose 1.1 percent, with benchmarks in Thailand and Turkey gaining at least 1.5 percent. South Korea’s Kospi rose to the highest since November.
Thailand’s shares rose after voters backed a new constitution, while South Korean assets were buoyed by a debt-rating upgrade. Turkish stocks rose to a three-week high after Moody’s Investors Service postponed a rating decision, saying on Friday it would keep assessing the medium-term impact of last month’s failed coup.
Trading volume with the Stoxx Europe 600 Index was 37 percent below the 30-day average as the gauge was little changed. Barclays Plc rallied after Exane BNP Paribas raised the lender’s recommendation to the equivalent of buy. BHP Billiton Ltd. and Anglo American Plc pushed miners higher. Airbus Group SE retreated after saying the U.K. Serious Fraud Office has opened a criminal investigation into allegations of fraud, bribery and corruption relating to some of the planemaker’s third-party consultants.
Bloomberg’s Dollar Spot Index, a gauge of the greenback versus its major peers, was little changed after climbing 0.7 percent over the previous three days.
While America’s jobs report surprised on the upside, Chinese data on Monday showed exports from the world’s biggest trading nation declined 4.4 percent in dollar terms from a year earlier in July and its imports dropped 12.5 percent.
The pound fell for a fourth day, on course for its longest losing streak since the U.K.’s decision to leave the European Union, as markets braced for the start of the Bank of England’s expanded monetary easing program.
The Japanese yen fell 0.5 percent and New Zealand’s dollar lost 0.3 percent. The won advanced 0.2 percent, having recovered from a loss of as much as 0.6 percent after S&P raised South Korea to AA, its third-highest ranking.
The yield on Treasuries due in a decade were little changed at 1.59 percent, having increased by nine basis points on Friday. That compares with the all-time low of 1.32 percent reached last month.
U.K. government bonds rose, pushing five-year yields to a record low, as markets digested the central bank’s plan to reinvigorate the economy in the wake of the June 23 Brexit vote. As well as cutting interest rates for the first time since 2009, the BOE surprised traders with its Aug. 4 policy announcement by increasing its gilt-purchase program to 435 billion pounds ($567 billion), starting Monday. Stimulus tends to undermine a currency by boosting the money supply.
Italy’s government bonds declined for the first time in three days after the nation’s sovereign rating came under review before a proposed constitutional referendum. Yields on the nation’s 10-year debt climbed from a 17-month low reached Friday after DBRS Ltd. said that it was reevaluating its A (low) credit grade, with negative implications.