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US stocks rise while treasuries fall before Fed minutes; oil advances

LiveMint logoLiveMint 21-05-2014 Emma O’Brien

Wellington/London: The Standard & Poor’s 500 Index rose while treasuries fell before the Federal Reserve releases minutes from its latest policy meeting. Oil advanced to a one-month high.

The S&P 500 increased 0.4% at 9:34 am in New York after halting a two-day rally on Tuesday. The Stoxx Europe 600 Index added 0.5% for the first gain in three days. The yield on 10-year treasury notes rose three basis points to 2.54%. The UK 10-year gilt rates climbed and the pound rallied after the Bank of England (BoE) said arguments favouring a rate increase are growing. Oil jumped 0.9% after the US inventories slid.

Minutes from the Fed’s April meeting due at 2 pm today may show discussion about factors to be used in deciding when to raise the benchmark federal funds rate. The BoE said in minutes of its last meeting that the policy decision was becoming more balanced for some committee members. The Bank of Japan (BoJ) maintained its bond-buying programme.

“We know that tapering will continue, so the most the Fed can do is reassure the market that the US economy is on a good track,” Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG, said by phone from Bonn. “Maybe investors are a little more cautious now with markets trading near records, but the mood is still positive.”

The S&P 500 had retreated 1.3% through Tuesday from an all-time high on 13 May as a sell-off in small-cap shares spread to the broader market. The Russell 2000 Index sank 1.5% on Tuesday, leaving it 9.2% below its March record. The gauge of small companies added 0.4% on Wednesday.

Retail Results

Tiffany & Co. jumped 9.8% after the world’s second- largest luxury jewellery seller reported profit that exceeded analysts’ estimates. Other retailers, including American Eagle Outfitters Inc. and PetSmart Inc., sank after reporting results that disappointed investors.

In Europe, BNP Paribas SA, France’s largest bank, lost 1.4% after a person familiar with the matter said the US authorities are seeking more than $5 billion to settle investigations related to sanctions.

Volvo AB dropped 0.9% after the world’s second-largest truckmaker said deliveries fell more than analysts had projected in April.

OAO Gazprom led Russian stocks higher, gaining 1.3% as the natural-gas company signed a $400 billion supply deal with China. The Micex Index advanced 0.5%.

President Vladimir Putin is turning to China to bolster Russia’s economy as relations sour with the US and European Union because of the crisis in Ukraine.

China Stocks

The Hang Seng China Enterprises Index recovered from earlier losses, rising 1.1%, while the Shanghai Stock Exchange Composite index added 0.8%. The gauges are rebounding after the latter dipped below the 2,000 threshold that analysts have cited as a trigger for state-linked funds to enter the market and policy makers to announce measures to prop up growth.

Moody’s Investors Service revised its outlook for China’s property industry to negative from stable on Wednesday, citing a slowdown in home sales growth as liquidity weakens and inventories rise in the coming 12 months. The outlook change is the first by the credit-rating company on China’s property market since November 2012.

India’s BSE Sensex declined 0.3%, dropping from a record high. The rupee weakened on speculation importers boosted dollar purchases to pay bills. Dubai’s DFM General Index rose 4.2%, ending a five-day, 13% slump.

Japan Policy

The yen strengthened to as much as 100.82 per dollar, before paring. Japan’s moderate economic rebound is continuing, BoJ governor Haruhiko Kuroda said.

“The BoJ is happy to sit and wait and see,” said David McDonald, Sydney-based chief investment strategist for the private banking and wealth management division of Credit Suisse Group AG, which manages $1.4 trillion for clients. “We’d prefer them to be more aggressive. We still expect the BoJ will do something more later in the year.”

Spain’s 10-year yield dropped seven basis points to 3.03%. The rate on 10-year treasury notes increased two basis points to 2.53% and one basis point on German bunds to 1.41%.

Germany received total bids of €4.232 billion ($5.8 billion) for May 2024 securities at an auction on Wednesday, compared with a goal of €5 billion. The debt sold at an average yield of 1.41%, down from 1.49% at an auction on 16 April.

The S&P GSCI gauge of 24 commodities rose 0.3%, the fourth consecutive advance and the longest streak since 17 April. West Texas Intermediate oil jumped to $103.20 a barrel. Crude supplies shrank 10.3 million barrels last week, the American Petroleum Institute reported on Tuesday. Palladium climbed as much as 0.5% to $830 an ounce.

Copper dropped as much as 1.4% to $6,790 a metric tonne, a one-week low, after Moody’s said house sales are set to slow in China, the world’s biggest consumer of the metal. Nickel declined. Bloomberg

Ben Sharples in Melbourne, Adam Haigh in Sydney and Claudia Carpenter, Cecile Vannucci and Sofia Horta e Costa in London also contributed to this story.

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