Stocks rise as commodities advance; bonds, yen drop

BLOOMBERG

Stocks rose with commodities, while the yen and government bonds slipped, as oil’s advance above $40 a barrel boosted economic optimism.
The MSCI All-Country World Index pared gains after the International Monetary Fund cut its global expansion forecast. Metals prices jumped, helping push the Bloomberg Commodity Index to the highest this month. The yen fell versus most of its major peers and German bund yields climbed the most in a month as demand for haven assets ebbed. Faster inflation boosted the pound and Sweden’s krona.
Oil, up about 10 percent this year, is extending gains before OPEC members meet with other major producers, including Russia, to discuss a freeze in the Qatari capital of Doha on April 17. That’s helping boost stocks even as analysts project a 10 percent contraction in profits for companies in the Standard & Poor’s 500 Index.
“There’s continued positive sentiment that is a function of a more dovish Fed as well as continued oil price strength and weakness in the dollar,” said David Spika, global investment strategist for GuideStone Capital Management. “Oil prices have really been the driver of sentiment, with a high positive correlation.”

Stocks
MSCI’s global equities index gained 0.3 percent at 9:38 a.m. in New York, while the S&P 500 added 0.2 percent. Stocks trimmed advances after the IMF said Tuesday in a quarterly update to its World Economic Outlook that the world economy will grow 3.2 percent this year, down from a projected 3.4 percent in January.
The benchmark gauge for U.S. stocks fell on Monday, after an advance fizzled in afternoon trading. Alcoa Inc. unofficially kicked off the reporting season yesterday, posting first-quarter sales that fell short of projections. Shares of the aluminum producer sank 4.7 percent today.
“We don’t have strong revenue growth — that’s what we heard from Alcoa,” said Spika. “Until we have that, particularly with wage pressure, it’s hard to justify a move higher in the market. Investors are whistling past the graveyard and not focusing on the key issue. It’s a show me market, and we need earnings to push it forward from here.”
The Stoxx Europe 600 Index rose 0.2 percent, reversing losses of as much as 0.7 percent. Anglo American Plc jumped 7.7 percent, pulling miners to the biggest advance on the equity gauge. Banco Popolare SC led banks higher, extending its three-day gain to almost 30 percent, as Italy created a fund to help troubled lenders raise capital and offload bad loans.
Japan’s Topix index climbed the most in three weeks as the yen weakened against all 31 major peers. Nomura Holdings Inc. jumped the most since February on a reported plan to shut its European equity operations.

Commodities
Oil rose from a four-month high in London, as forecasts for lower U.S. shale production signaled the global oversupply will slowly diminish. Output from U.S. shale formations will drop to 4.84 million barrels a day in May, the lowest in almost two years, according to a report Monday from the Energy Information Administration.
Brent crude advanced 1.2 percent to $43.36 a barrel, while West Texas Intermediate added 1 percent to $40.76.
Copper recovered for a second day from its biggest weekly loss in three months, rising 1.4 percent to $4,728.5 a metric ton. Aluminum rose 1.4 percent to $1,529.5 a ton.
Gold was little changed, while s ilver in the spot market climbed 0.8 percent, extending the biggest gain in six months.

Emerging Markets
The MSCI Emerging Markets Index rose 0.6 percent, taking its four-day advance to 2.4 percent. Gulf stocks gained with oil, sending shares in Saudi Arabia and Dubai up at least 1.4 percent. Benchmark gauges in South Africa and South Korea gained more than 0.5 percent.
Brazil’s Ibovespa Index jumped 1.9 percent. A committee of Brazilian lawmakers voted to recommend the impeachment of President Dilma Rousseff on allegations she bypassed Congress to illegally finance a budget deficit. The real fell the most out of 24 emerging-market currencies, losing 1.2 percent, after the central bank increased the size of a foreign-exchange reverse swap auction.
The Shanghai Composite Index fell 0.3 percent while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.4 percent.
The MSCI Emerging Markets Currency Index increased for the fourth day, rising 0.1 percent. Russia’s ruble led gains, rising 0.9 percent. Chile’s peso, South Africa’s rand and Mexico’s peso also strengthened.

Currencies
The yen halted a seven-day advance against the dollar, before central bankers and finance ministers from the Group of 20 meet this week. Japan will take proper action if moves are extreme, Finance Minister Taro Aso said Tuesday. The yen weakened 0.4 percent to 108.38 per dollar, while losing 0.2 percent to 123.44 per euro.
The Swedish krona climbed to the strongest level since early January against the euro as inflation accelerated more than analysts anticipated last month, cooling pressure on the central bank to add stimulus at next week’s policy meeting.
The pound advanced for a third day against the dollar after similar data in the U.K. also showed faster price growth.

Bonds
Treasuries fell, with 10-year yields climbing three basis points to 1.76 percent, before the U.S. is due to sell $24 billion of three-year notes, part of a combined $56 billion of planned coupon-bearing debt sales this week.
Euro-area government bonds also retreated with longer-dated maturities bearing the brunt of a selloff in the region, as investors prepared to absorb new debt, including France’s sale of 50-year securities through banks and a Dutch auction of debt due in 2047.
The deluge of supply is disturbing a rally that has seen longer-dated bonds outperform as investors seek higher yields further along the curve after the European Central Bank’s stimulus measures suppressed shorter-dated yields.
German 10-year bond yields rose four basis points to 0.15 percent, while France’s 30-year bond yield rose seven basis points to 1.48 percent, having
increased nine basis points in the
previous two days.