Commodities rose after the biggest rally in Shanghai’s benchmark stock index in three years as manufacturing reports in China and the U.S. fueled optimism in the economy. Treasuries climbed following a decrease in consumer prices, while U.S. stocks were little changed.
The Standard & Poor’s GSCI gauge of 24 materials climbed 0.4 percent at 9:45 a.m. in New York as energy and agricultural products led gains. Ten-year U.S. Treasury yields decreased two basis points to 1.71 percent after rising for three days. The S&P 500 was little changed near 1,419, while the Stoxx Europe 600 Index drifted between gains and losses. The dollar weakened against 12 of 16 major peers. Spanish and Italian bonds rose.
Reports earlier today showed China’s factory production may expand at a faster pace this month, while confidence worsened among Japanese manufacturing companies. President Barack Obama and Republican House Speaker John Boehner remained deadlocked yesterday during their third White House meeting on next year’s budget. The cost of living in the U.S. dropped last month for the first time since May.
“The most recent China manufacturing data is indeed encouraging for commodities as China is still one of the biggest consumers for many natural resources,” said Frederique Dubrion, president and chief investment officer of Blue Star Advisors SA in Geneva. “Monetary-easing programs and the stabilizing global outlook will give more opportunity within materials.”
CPI Data
The 0.3 percent decrease in the consumer-price index followed a 0.1 percent gain the prior month, the Labor Department reported today in Washington. The median estimate of 80 economists surveyed by Bloomberg called for a 0.2 percent drop. The core index, which excludes volatile food and energy costs, climbed less than projected.
Oil rose 0.4 percent to $86.27 a barrel in New York, while gasoline, heating oil and soybeans climbed at least 1 percent to lead gains in commodities. Nickel and zinc rose at least 0.5 percent. China is the world’s biggest buyer of industrial metals.
The S&P 500 slipped from an almost two-month high yesterday amid deadlock over the U.S. budget debate. The index tumbled as much as 5.3 percent after the Nov. 6 election set up a budget showdown between President Barack Obama and House Republicans, then recovered most of the drop.
Among U.S. stocks, Adobe Systems Inc. rallied 5.6 percent in early New York trading after reporting fiscal fourth-quarter sales and profit that exceeded analysts’ estimates.
More than three stocks rose for every two that fell on the Stoxx 600. Akzo Nobel surged 7.6 percent, its biggest advance in 14 months, as PPG Industries Inc. agreed to buy the Dutch company’s North American paint business for $1.05 billion.
Alcatel-Lucent SA soared 8.4 percent after the company reached a 1.6 billion-euro ($2.1 billion) financing deal. The French phone-equipment maker’s bonds rose to the highest in eight months.
Spain’s 10-year bond yield fell four basis points to 5.36 percent, while the rate on similar-maturity Italian debt dropped eight basis points to 4.57 percent.
The Shanghai Composite Index gained 4.3 percent, its biggest rally since October 2009. Hong Kong’s Hang Seng Index rose 0.7 percent. Japan’s Topix Index, a broad gauge of stocks, closed above 800 for the first time since April.
The reading on the Chinese purchasing managers’ index was 50.9, according to HSBC Holdings Plc and Markit Economics, compared with the 50.8 median estimate of economists surveyed by Bloomberg News. November’s final reading was 50.5, the first time in 13 months that the gauge exceeded the 50 mark dividing expansion from contraction.
Manufacturing
Japan’s large manufacturers became the most pessimistic since March 2010, the central bank’s quarterly survey showed. The Tankan index fell to minus 12 in December from minus 3 in September, its fifth straight negative reading. The median estimate of economists surveyed by Bloomberg News had called for a reading of minus 10. A negative figure means that pessimists outnumber optimists.
The MSCI Emerging Markets Index snapped a seven-day rally, declining 0.1 percent, as technology companies fell.
The Egyptian pound strengthened 0.1 percent to 6.1684 per dollar, recovering from its weakest level in eight years, as supporters and opponents of President Mohamed Mursi plan protests before a referendum on a draft constitution that has polarized voters. Cairo and nine other governorates will vote tomorrow, with the rest of the country taking part a week later.
