Global stocks extend gains as China trade improves

BLOOMBERG

The cloud that China cast over financial markets is starting to lift — and that’s a boon for stocks and commodities. After trade data pointed to stronger growth in the world’s second-biggest economy, global equities wiped out the last of this year’s losses, copper and iron ore jumped, and haven assets including the yen and gold retreated.
European stocks rose for a fourth day, shares in emerging markets climbed to the highest since November, and China’s equities traded in Hong Kong gained the most worldwide, as the Asian nation’s exports surged. Russian stocks headed for their highest close since 2008. Futures on the Standard & Poor’s 500 Index rose, with JPMorgan Chase & Co. gaining in premarket trade after earnings beat estimates. U.S. crude slid, after surging 13 percent in three days before producers meet to discuss output at a meeting in Doha this weekend. The cost of insuring European investment-grade corporate debt against default fell for a fourth day.
After roiling financial markets in the first six months of the year, signs that the slowdown in the Chinese economy may not be as deep as some investors expected are helping fuel a recovery in equities. Exports jumped by the most in a year in March and declines in imports narrowed, improving the outlook for growth, with data due Friday estimated to show a 6.7 percent expansion for the first quarter. Speculation the oil market will soon find some enduring stability is also helping to prop up equities, even as investors brace for what’s projected to be the worst U.S. earnings season since the global financial crisis.
“The commodity sector is well supported after the good numbers out of China,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Most investors were under-invested or were on the downside, they all thought we should see a bigger correction. If earnings disappoint, morale can go down really quickly, but so far it looks good.”

Stocks
The Stoxx Europe 600 Index rose 2 percent as of 12:33 p.m. London time, heading for its longest winning streak in more than a month. Commodity producers — one of the only industry groups up for the year — were among the biggest gainers, with Anglo American Plc and ArcelorMittal up at least 6 percent, while BHP Billiton Ltd. — the world’s largest miner — added 5.5 percent. The FTSE 100 Index, rich in resource companies, turned positive for the year. Italian lenders led the rebound in banking shares.
Axa SA rose 5.3 percent after people with knowledge of the matter said France’s largest insurer is in talks to sell most of its U.K. life-insurance and wealth-investment units. Tesco Plc slid 5.6 percent after the grocer said profit this year will be held back by the cost of improving its product range.
Futures on the S&P 500 added 0.6 percent, indicating U.S. equities will gain for a second day. JPMorgan rose 2.9 percent in premarket New York trade after reporting first-quarter adjusted earnings per share of $1.41, beating the $1.25 average estimate of 29 analysts surveyed by Bloomberg.
Coal giant Peabody Energy Corp. voluntarily filed for Chapter 11, the company said in a statement dated April 13. Besides earnings, investors will also parse data on retail sales and producer prices for indications of the health of the world’s biggest economy and the possible trajectory of interest rates.
The MSCI Asia Pacific Index jumped 1.8 percent, set for its highest close in more than three months. Measures of energy and materials stocks climbed at least 2.6 percent.
The Hang Seng China Enterprises Index of mainland shares listed in Hong Kong jumped 4 percent and the Shanghai Composite Index advanced 1.4 percent. Both gauges climbed to the highest levels in more than three months. China COSCO Holdings Ltd. added 7.6 percent in Hong Kong, leading a rally in shipping stocks.
China’s overseas sales in March increased 11.5 percent from a year earlier in dollar terms, rebounding from a 25 percent plunge in February, and declines in imports narrowed, a report showed on Wednesday.
The MSCI Emerging Markets Index rose for a fifth day, climbing 1.3 percent. Equity benchmarks in India, Poland, Turkey and Taiwan added at least 1 percent while South Africa jumped 2.2 percent. Russia’s Micex Index rose 1.4 percent. South Korean markets were closed Wednesday for parliamentary elections.

Currencies
The yen weakened 0.8 percent versus the dollar, heading for its first back-to-back loss in this month. Japan’s economic recovery is weak and prices don’t seem to be rising, central bank board member Yutaka Harada said Wednesday.
The dollar advanced against most of its major peers before reports on Wednesday that economists forecast will show U.S. economic growth remains intact. The greenback appreciated 0.8 percent to $1.1301 per euro.
San Francisco Federal Reserve President John Williams’ said on Tuesday that two or three interest rate increases this year was a reasonable call. Futures contracts indicate traders assign about a 51 percent chance that the Fed will raise interest rates this year after liftoff from near zero in December.

Commodities
Copper rose 1 percent to $4,816 a metric ton, leading industrial metals higher after China, the world’s biggest consumer, boosted foreign purchases to an all-time high. Aluminum advanced 1.4 percent and nickel gained 1 percent. Iron ore closed 2.3 percent higher in China at 419 yuan a metric ton, the highest since March 21.
Oil declined from a four-month peak amid speculation over the likely outcome of a meeting by major suppliers to discuss freezing output, while U.S. industry data showed crude stockpiles expanded last week. West Texas Intermediate fell 1.7 percent to $41.46 a barrel and Brent dropped 1.4 percent to $44.07.
Russia sees “hope” for a deal to freeze oil output in Doha this weekend, regardless of Iran’s stance, Dmitry Peskov, the Kremlin’s press secretary, said following a conversation between Russian Energy Minister Alexander Novak and his Saudi counterpart. The Middle Eastern nation previously said that its commitment to a production cap would depend on the participation of Iran, which has said it won’t join the freeze.
Gold fell 1.1 percent to $1,242.15 an ounce, slipping from the highest level in more than three weeks as investors assessed the timing of higher borrowing costs in the U.S.
U.S. natural gas advanced 2 percent to $2.043 per million British thermal units, a second day of gains. Shale gas production in the nation will drop for a fifth month in May, according to a drilling report from the Energy Information
Administration.
Rubber for September delivery on the Tokyo Commodity Exchange surged to an eight-month high amid expectations of higher demand from China.

Bonds
Treasuries extended a three-day drop before the U.S auctions $20 billion of debt due in 2026. The yield on the 10-year securities was at 1.79 percent, after adding nine basis points in the previous three days. German government bonds halted a three-day decline spurred by sales of longer-dated debt as investors’ focus returns to the region’s sluggish economy and lack of inflation. Benchmark 10-year bund yields fell from the highest this month even as Europe’s equities
advanced.
The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies fell two basis points to 75 basis points. An index of swaps on junk-rated companies declined eight basis points to 321 basis points.