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U.S. Stocks Advance With Commodities While Treasuries Retreat

September 26, 2013

Sept. 26 (Bloomberg) -- U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding following its longest losing streak of the year, and commodities advanced after jobless claims unexpectedly decreased. Treasuries fell.

The S&P 500 climbed 0.3 percent to 1,698.48 at 9:34 a.m. New York time following a five-day slump. The S&P GSCI gauge of 24 commodities gained 0.1 percent, with copper adding 0.9 percent. Ten-year Treasury yields increased two basis points to 2.65 percent after falling for four days. The Shanghai Composite Index decreased 1.9 percent, the Stoxx Europe 600 Index was little changed and Italian 10-year bonds fell for the first time in nine days. Japan’s Topix Index rose 0.8 percent while the yen slipped against all major peers.

Initial jobless claims dropped by 5,000 to 305,000 last week. The government’s final estimate of U.S. growth showed that the economy expanded at a 2.5 percent annualized rate, unrevised from the previous report and signaling the nation was weathering federal budget cutbacks and higher taxes. President Barack Obama and congressional Republicans are debating the U.S. federal budget in a confrontation that risks a government shutdown within days.

"Risk conditions turned slightly more upbeat," analysts led by Vincent Chaigneau, global head of rates and foreign- exchange strategy at Societe Generale SA in Paris, wrote in an investor report today. "Toxic politics in Washington have yet again the potential to disrupt the investment environment. Our base scenario by default is that cooler heads will prevail."

 

U.S. Stocks

 

The S&P 500 advanced after closing at the lowest level in more than a week. The index had fallen 1.9 percent over the previous five days after closing at an all-time high on Sept. 18.

The yield on 10-year Treasury notes has fallen from a two- year closing high of 2.99 percent on Sept. 5.

Federal Reserve Bank of Richmond President Jeffrey Lacker said in Stockholm that the size of the Fed’s balance sheet increases the risks and the costs of policy errors. Minneapolis Fed President Narayana Kocherlakota will speak today in Houghton, Michigan, and Fed Governor Jeremy Stein talks on "Yield Oriented Investors and the Monetary Transmission Mechanism" at Goethe University in Frankfurt today.

Japanese Prime Minister Shinzo Abe will announce an economic stimulus package on Oct. 1 at the same time as his decision on whether to raise the country’s sales tax, ruling Liberal Democratic Party tax panel chief Takeshi Noda told reporters today. The nation plans to pledge to promptly start a study on cutting the effective corporate tax rate, Kyodo News reported, without citing anyone.

 

Topix, Yen

 

The Topix climbed to 1,220.49 at the close in Tokyo, its highest since July 23.

The yen pared a decline after an advisory panel for Japan’s Government Pension Investment Fund said the administration should review its portfolio. Takatoshi Ito, an economist who leads the panel, said in an interview earlier this week that there "was a consensus" to reduce the fund’s allocation to government bonds.

Japan’s currency weakened 0.5 percent to 98.96 per dollar, after sliding as much as 0.7 percent before the pension fund announcement. It was down 0.3 percent at 133.6 per euro. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, gained 0.2 percent.

The MSCI Emerging Markets Index fell 0.2 percent, paring its quarterly gain to 6.9 percent.

 

China Shares

 

The Shanghai Composite Index slumped the most in more than a week as companies linked to the city’s free-trade zone led declines amid concern recent gains were excessive. Taiwan’s TWSE Index dropped 1.2 percent and Poland’s WIG20 Index jumped 1 percent.

Copper for three-month delivery on the London Metal Exchange gained for a second day, climbing 0.9 percent to $7,265.25 a metric ton, after jumping 0.7 percent yesterday. The metal rose 7.7 percent this quarter. All six main industrial metals traded on the exchange advanced.

West Texas Intermediate crude for November delivery rose for the first time in six days, climbing 0.4 percent to $103.02 a barrel on the New York Mercantile Exchange. WTI closed yesterday at the lowest settlement since July 3.

Italy’s 10-year bond yields increased nine basis points to 4.32 percent before the country auctions as much as 6 billion euros ($8.1 billion) of debt tomorrow.

Volume on the Stoxx 600 was 20 percent greater than the average of the past 30 days. The gauge has surged 9.8 percent this quarter, on course for the biggest gain in four years.

 

Movers

 

Ladbrokes Plc sank 6.5 percent as the U.K. gambling operator said 2013 operating profit for the digital unit will be below analysts’ estimates. Thomas Cook Group Plc slid 5.5 percent after the U.K. tour operator said winter bookings have started more slowly than last year.

Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, surged 6.9 percent after reporting quarterly profit that topped estimates for the first time this fiscal year. Alcatel-Lucent SA rallied 7.9 percent as people with knowledge of the matter said Nokia Oyj, which is set to become a manufacturer focusing on wireless networks after the sale of its handset business, is evaluating a linkup with the French company. Nokia was little changed in Helsinki trading.

 

--With assistance from Yoshiaki Nohara in Tokyo and Tom Stoukas in Toronto. Editors: Michael P. Regan, Paul Dobson

 

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net

 

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

 

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