Stocks rallied as investors piled into risk assets, sending emerging-market currencies and shares higher after a weakening yuan triggered losses in Asian markets. Crude rose to above $30 a barrel.
The Standard & Poor's 500 Index climbed for a third day, headed for its longest winning streak of the year, as the benchmark continued to rebound from the lowest level in 22 months last week. Shares in Europe rose as companies including Credit Agricole SA reported better-than-estimated results. Some of this year's most beaten-down sectors, such as technology, energy and banks, led a recovery after global equities sank into a
bear market last week. Emerging market currencies and stocks also gained, as oil prices extended a rebound in afternoon trading. Treasuries fell for a third day in the longest stretch of losses since December, as haven demand cooled.
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Global equities tumbled into a
bear market last week, after attempts by central banks to quell volatility this year have had mixed success as investors grappled with concern China's slowdown will deepen. Minutes of the Federal Reserve's most recent meeting, where officials indicated they were monitoring turmoil in markets, are due Wednesday. Chair Janet Yellen has also indicated the global turbulence may delay further tightening of U.S. monetary policy.
“The recent pullback in valuations has made risk assets and equities more attractive than they were coming into the end of the year,” said Stephen Wood, who helps manage $237 billion as chief market strategist for North America at Russell Investments in New York. “For asset managers, that provides an opportunity. Volatility is likely to remain — valuations have come down, but fundamentals have not radically changed. Oil is still showing weakness, the
Federal Reserve is still in play, the U.S. looks to be doing okay and China is growing at a slow rate.”
STOCKS
The S&P 500 added 1.7% at 1:04 p.m. in New York. Index futures held gains even after a report showed new-home construction cooled in January. Separate data showed manufacturing output rose last month by the most since July 2015, while wholesale prices in the U.S. unexpectedly increased in January.
The year's most battered shares continued to rebound, with carmakers and energy companies leading the rally on Wednesday.
The Stoxx Europe 600 Index rose 2.6%, as Credit Agricole led a rebound in lenders, rallying 14% after also saying it will sell back stakes in regional banks to shore up capital.
Glencore Plc pushed a gauge of commodity stocks higher, advancing 17% after the Swiss trader said it won new loan commitments from banks to replace an existing $8.45 billion revolving credit facility.
The MSCI Asia Pacific Index dropped for the first time in three days, with Japan's Topix sliding 1.1%.
EMERGING MARKETS
The MSCI Emerging Markets Index climbed 0.9%. A gauge of 20 developing-market currencies reversed earlier losses amid gains in emerging Europe, Africa and Latin America. Russia's ruble, Mexico's peso and Brazil's real led gains, strengthening at least 2.2%.
Mexico's currency lifted after the nation announced a wide range of measures to bolster investor confidence, including spending cuts, an increase to the benchmark lending rate and new intervention efforts to support the world's worst-performing major currency.
The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong fell 1.2% after
UBS Group AG and Bocom International Holdings Co. said China's lending surge can't continue. S&P said the increase in debt relative to gross domestic product could pressure the country's credit rating.
The yuan fell 0.13% to 6.5270 per dollar, according to China Foreign Exchange Trade System prices. The People's Bank of China cut its reference rate by 0.16% to a one-month low of 6.5237, surprising some analysts who had forecast smaller moves ahead of a Group of 20 meeting next week.
That unsettled Asian markets, with Malaysia's ringgit and South Korea's won sliding more than 0.9%.
COMMODITIES
West Texas Intermediate crude rose 6.4% to $30.91 a barrel, after sliding 1.4% on Tuesday on news of a Saudi-Russia output agreement, the first significant cooperation between OPEC and non-OPEC producers in 15 years. Brent advanced 7.5% to $34.59.
Iran's Oil Minister Bijan Namdar Zanganeh will meet with counterparts from Iraq, the second-biggest OPEC producer, and Venezuela on Wednesday, the Iranian news agency Shana said.
Gold in the spot market advanced 0.8%, halting a three day drop, while copper headed for the longest stretch of gains since December.
CURRENCIES
The U.S. dollar fell for the first time in five days, with the Bloomberg Dollar Spot Index losing 0.6%, as the rebound in crude boosted demand for the currencies of commodity-exporting countries.
The greenback was little changed at $1.1142 per euro. It was 0.1% higher at 114.20 yen.
BONDS
The yield on U.S. 10-year Treasuries increased six basis points to 1.83%, after earlier reaching 1.7%.
“There's been a stabilization in oil prices, stocks are up and we got better-than-expected economic data so we're seeing a little bit of pressure on fixed income,” said Dan Mulholland, head of Treasury trading in New York at Credit Agricole SA.
Germany's 10-year bund yield was at 0.27% after the government auctioned 5 billion euros ($5.6 billion) of 2026 bonds at an average yield of 0.26%, the least since April.
