Global stocks buoyed by China stimulus
Global stocks rallied with US equity futures, emerging-market currencies rose and crude oil climbed to an eight-week high as monetary stimulus in China brightened prospects for the world's second-largest economy.
Benchmark share indexes advanced across Asia after the People's Bank of China cut lenders' reserve requirements, freeing up funds to help spur lending. Russia's ruble and South Africa's rand led gains among major currencies, while China's yuan rose for the first time in eight days. Nickel and tin led gains in industrial metals prices as Germany's bonds declined. Japan sold 10-year debt at a negative yield for the first time. While February marked a fourth consecutive monthly decline in global stocks, a benchmark equities index rallied more than 5 percent since Feb. 11. Mounting signs 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, along with rebounds in crude oil and the yuan.
"Market sentiment is on its way toward a recovery, but the slightest bad news can still rock it," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo.
The cut in Chinese lenders' reserve requirements was the first in four months and comes after the economy expanded last year at the slowest pace in a quarter century. 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 Stoxx Europe 600 Index gained 0.3 percent as of 8:25 a.m. London time. Barclays Plc slid 5.7 percent in London after the bank said fourth-quarter profit fell by more than half and announced plans to sell down a 62 percent stake in its Africa business -- news that led to Barclays Africa Group Ltd. falling as much as 5 percent in Johannesburg. Glencore Plc declined 1.1 percent after the commodities company reported a 69 percent slump in annual profit. The MSCI Asia Pacific Index rose 0.8 percent headed for its biggest gain in a week. India's S&P BSE Sensex jumped 2.8 percent, rallying after the government announced its budget on Monday. Hong Kong's Hang Seng Index added 1.6 percent and the Shanghai Composite Index gained 1.7 percent, trimming its loss for the year to 23 percent.
China's $5.3 trillion stock market will rebound as much as 20 percent in the "short term" as economic growth picks up and yuan volatility decreases, according to Lirong Xu, chief investment officer at Franklin Templeton's money-management unit in Shanghai. That view was echoed by Gao Ting, head of China strategy at UBS Securities Co. in Shanghai, who said sentiment is "overly pessimistic" and there's a growing chance of a rally within the next three months as the central bank loosens monetary policy.
Standard & Poor's 500 Index futures rose 0.4 percent, reversing earlier declines.
The yuan strengthened 0.2 percent versus the dollar as the People's Bank of China raised its daily reference rate for the first time in a week. The currency strengthened 0.3 percent in February, after losses of 1.3 percent or more in each of the previous three months.
"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.