Stocks Gain With Commodities Amid China Optimism: Markets Wrap

Bloomberg.- Stocks rose with commodities on signs China’s economy is strong enough for policy makers to keep pushing for economic reforms in 2017. Crude touched an 18-month high and the dollar rallied as bonds fell.

European equities headed for a bull market, climbing a third day with banks and miners among the biggest gainers after China’s manufacturing purchasing managers index stabilized near a post-2012 high. Copper and nickel advanced and U.S. crude soared to the highest level since July 2015 as OPEC member Kuwait cut output. Bonds declined as data showed inflation in Germany accelerated, while a gauge of the dollar headed for the strongest close since 2002.

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The gains mark a reversal from a year ago, when a selloff in Chinese equities roiled markets globally. Instead the world’s second-largest economy has been a source of strength, after data also showed services remaining robust and a private manufacturing measure came in better than anticipated. That’s helped improve investor risk appetite following a period of caution at year-end.

“Equities are making a very positive start to 2017,” said Michael Van Dulken, head of research at Accendo Markets in London in a note to clients. “Investors have clearly retained their pre-Christmas bullishness, preferring to focus to the positives rather than dwell on political uncertainty.”

Stocks

– The Stoxx Europe 600 Index climbed 0.9 percent at 7:56 a.m. in New York. The benchmark is poised to close in a bull market, up 20 percent from its February 2016 low.
– So-called cyclical shares including banks, miners and carmakers led gains, while defensive stocks deemed more immune to economic growth trailed.
– Next Plc slid 3.3 percent for one of the worst performances on the Stoxx 600 after Deutsche Bank AG lowered its recommendation on the retailer to hold from buy.
– S&P 500 futures rose 0.7 percent, signaling the underlying benchmark will rebound from a three-day decline as markets reopen after holidays.

Bonds

– Treasuries dropped, with 10-year yields rising six basis points to 2.5 percent. U.S. cash bonds opened in London this morning having been closed since Dec. 30.
– German bonds fell as data showed inflation accelerated to the fastest rate since 2013. The yield on the nation’s 10-year securities dropped to the lowest level since November on Monday.
– French bonds were among the biggest decliners in Europe after the nation was said to mandate banks for the sale of a new Green bond in the 15- to 30-year area. France is due to sell 10-, 20-, 30- and 50-year bonds on Jan. 5.

Commodities

– Crude oil rose 2.4 percent to $55.02 a barrel in New York, touching the highest level since July 6, 2015.
– Gold traded little changed at $1,148.77 an ounce.
– Nickel jumped 1.4 percent to $10,160 a ton on the London Metal Exchange, and copper rallied 1 percent to $5,588 an ounce.

Currencies

– The U.S. Dollar Index increased 0.6 percent.
– The yen slid 0.5 percent to 118.17 per dollar, giving up an earlier advance.
– The euro erased earlier gains to trade down 0.6 percent against the greenback.
– South Korea’s won strengthened 0.4 percent.

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