U.S. stocks rise with emerging markets

U.S. stocks advanced after manufacturing in the world’s largest economy showed signs of stabilizing, while optimism that central banks from Asia to Europe will add to stimulus boosted emerging-market currencies and metals. Treasuries fell with gold.
The Standard & Poor’s 500 Index rebounded from its third consecutive monthly decline, while European equities headed for a fourth day of gains for the first time since October. The yuan strengthened for the first time in eight days, while the Canadian dollar climbed after a report showed the nation’s economy unexpectedly grew in the fourth quarter. Crude erased gains in New York.

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While February marked a fourth consecutive monthly slide for global stocks, signs that financial tension in China and a slump in commodities are abating has seen shares recover more than 5% since Feb. 11. Data suggesting that American consumers can still power the world’s largest economy and hints from central banks in Asia and Europe that more stimulus is at the ready underpinned the revival.
Equities got a boost after data showed American factory activity in February shrank less than forecast as gains in new orders and production provided signs that the beleaguered industry could soon stabilize. Factories should also find a source of strength in domestic demand, which is being boosted by consumers with solid job gains and a nascent pickup in wage growth. A rebound in oil prices in the final two weeks of February also helped stabilize equity markets.
“The numbers today were pretty decent with manufacturing up from estimates and the construction numbers were pretty good as well so if inflation keeps moving over the next few months that could be a good thing as we started the year talking about negative rates and deflation,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone. “Financials are also bouncing back after getting beat and as we get some stability in oil prices, things are looking a little better.”
STOCKS
The S&P 500 climbed 0.8% at 10:16 a.m. in New York, rebounding from a slide Monday that erased its gain for February. The index’s three-month dis the longest since 2011, though its 5.6% surge since Feb. 11 has cut a loss in 2016 by half.
The Stoxx Europe 600 Index climbed 0.8%, with all industry groups rising. The equity benchmark has rebounded more than 10% since falling to a 2013 low on Feb. 11, led by miners and energy producers.
London Stock Exchange Group Plc jumped 8.4% on Tuesday after Intercontinental Exchange Inc. confirmed it’s considering a counter bid for the company, which is planning to merge with Deutsche Boerse AG. Swiss Life Holding AG rose 4.3% after its proposed dividend beat analyst estimates.
Trading of Barclays Plc shares was temporarily halted in London after they slid as much as 11%. The bank announced plans to sell its stake in an African business and cut its dividend, after fourth-quarter profit tumbled to less than half the average analyst estimate.
EMERGING MARKETS
The MSCI Emerging Markets Index gained for a third day, climbing 1.4%. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong increased 1.9%, and the Shanghai Composite Index advanced 1.7%, the most in a week.
Data from China showed a manufacturing purchasing managers index contracted more than estimated in February, matching the lowest level in seven years, according to the statistics bureau. The nation’s parliament will gather on Saturday for an annual meeting, where plans for 2016 and the next five years will be outlined.
The yuan rose for the first time in eight days in Shanghai after the PBOC raised its reference rate by 0.1% to 6.5385.
“With a stronger fixing, they’re trying to ensure a stable yuan even as they ease policy through the reserve-requirement-ratio channel,” said Khoon Goh, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore.
India’s S&P BSE Sensex jumped 3.4%, the most on a closing basis since 2013, after Prime Minister Narendra Modi on Monday unveiled a pro-farmer budget, which set aside 877.7 billion rupees ($12.9 billion) to be spent on expanding irrigation, crop insurance, rural roads and on improving groundwater resources.

CURRENCIES

The yen dropped against 31 major peers, falling from strongest level in almost three years against the euro. It declined 0.3% to 112.99 per dollar and slipped 0.3% to 122.94 per euro. Canada’s dollar strengthened 0.4% against its U.S. counterpart.

Russia’s ruble rose 1.7% versus the dollar and Malaysia’s ringgit strengthened 0.8% as the rebound in crude prices brightened prospects for the oil-exporting nations. South Africa’s rand gained 0.5% as data showed foreign investors on Monday pumped the most money into the nation’s stock market since 2009.

A Bloomberg gauge of 20 developing-nation currencies rose 0.4%, extending Monday’s advance. The measure increased 0.3% in February after falling 5.1% over the previous three months.

COMMODITIES

Oil climbed from the highest close in more than seven weeks following the first monthly decline in production from the Organization of Petroleum Exporting Countries since November. West Texas Intermediate rose as much as 2.3% to $34.52 a barrel.

Iraq’s production dropped by 125,000 barrels a day to 4.385 million after the pipeline exporting crude from the northern part of the country was halted, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabian output was unchanged at 10.2 million barrels a day.

Nickel led gains in industrial metals, rising 1.1%. Lead climbed 0.9%.

BONDS

Germany’s bonds fell as demand for haven assets waned. The 10-year yield increased by two basis points to 0.13%. Similar-maturity U.S. Treasuries were little changed with the yield at 1.74%.

The Japanese government got paid to borrow money for a decade for the first time, selling 2.2 trillion yen of the debt at an average yield of minus 0.024% on Tuesday. The benchmark 10-year bond yield dropped to minus 0.075% after the auction, matching a record low.

The Markit iTraxx Europe Crossover Index of credit-default swaps on sub-investment grade companies declined seven basis points to 401 basis points, earlier dropping below 400 basis points in about a month. A gauge of investment-grade swaps fell for the sixth time in seven days, declining two basis points to 98 basis points.