U.S. Stocks Advance, Reversing Global Slump; Commodities Drop
June 27 (Bloomberg) -- U.S. stocks rose, rebounding from three days of losses and reversing a worldwide slump, as banks rallied after regulators announced rules to safeguard the global financial system. Commodities fell to the lowest level since January, and bonds of Europe's most-indebted nations fell.
The Standard & Poor's 500 Index climbed 0.9 percent to 1,279.51 at 12:11 p.m. in New York. The MSCI All-Country World Index of shares added 0.3 percent after falling as much as 0.4 percent. The S&P GSCI Index of 24 commodities lost 0.6 percent as hogs, silver and wheat dropped more than 1.8 percent. Portugal and Ireland's 10-year bond yields advanced 28 and 12 basis points, respectively, to record highs.
"Evidence suggests that particularly the U.S. banks are in better position to reach those capital requirements," said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $48 billion. "There's a lot of anxiety about the Greece situation. The progress when dealing with the European debt crisis is slow."
Global regulators said banks deemed too big to fail must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another financial crisis. Commodities plunged and Portuguese and Irish bonds fell as Greek lawmakers start a three-day debate to approve a 78 billion euro ($110 billion) austerity package. The nation's creditors are headed toward an agreement to roll over 70 percent of their holdings into longer-maturity debt in an effort to prevent a default that may roil the euro region.
Emerging Markets
Developing nations led losses earlier in equities. The MSCI Emerging Markets Index retreated 0.3 percent. Benchmark stock indexes for South Korea and Poland lost at least 1 percent. Measures for Russia and Taiwan slumped 0.4 percent.
Equities declined after the Bank for International Settlements said policy makers must raise interest rates to control inflation and may have to act faster than in the past. While policy makers in Asia and Latin America are already boosting borrowing costs to damp price pressures, rates remain near record lows in the world's largest developed economies.
Bank helped lead gains in U.S. equities. Bank of America Corp. rose 2.5 percent, PNC Financial Services Group Inc. added 2.1 percent and Citigroup Inc. rallied 1.2 percent. Huntington Bancshares Inc. advanced 3.4 percent, the third-biggest gain in the S&P 500. In the Stoxx Europe 600 Index, financial shares fell less than 0.1 percent.
'Less Onerous'
The new capital rules from the Basel Committee on Banking Supervision are "less onerous than had been feared," said Scott Tapley, who helps oversee $2.5 billion at 1st Source Investment Advisors Inc. in South Bend, Indiana. "It makes it more likely that they can resume more normal-looking dividend payments sooner rather than later."
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose 5.5 basis points to 247.5, after earlier reaching a record. Greek, Portuguese and Irish 10- year bonds declined, driving up the extra yield investors demand to hold the securities instead of benchmark German bunds. The Portuguese-German spread widened 22 basis points to a record and the Irish-bund gap jumped to a euro-era high.
The Markit iTraxx SovX WE gauge of default swaps, and contracts tied to Greece climbed 23 basis points to 2,138, signaling an 84 percent probability of default within five years, according to CMA. Swaps insuring Irish bonds added 27 basis points to an all-time high 832 and Portugal increased 21 to a record 859.
Consumer Spending
This is "another week where all eyes will be on Greek politicians as they gather to debate the latest austerity package that's needed to ensure that funds are made available to avoid a default within the next few weeks," Gary Jenkins, head of fixed-income at Evolution Securities Ltd. in London, wrote in a client note. "Or at least, that's the threat."
U.S. shares advanced even after American consumer spending unexpectedly stagnated in May. Purchases were little changed, the weakest outcome since June 2010, after a revised 0.3 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.1 percent gain.
To contact the reporters on this story: Nick Baker in New York at nbaker7@bloomberg.net Rita Nazareth in New York at rnazareth@bloomberg.net .
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net .
Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/
No comments:
Post a Comment
Please comment as you wish and share this if you like :)