Emerg­ing-mar­ket stocks rise; bonds gain

The Pak Banker - - MARKETS/SPORTS -

Shares in de­vel­op­ing na­tions were on the brink of a bull mar­ket as oil traded near $40 a bar­rel and fa­vor­able shifts in cen­tral­bank poli­cies sup­ported riskier as­sets. Bonds ex­tended this week's gains.

Emerg­ing-mar­ket stocks ad­vanced for a third day af­ter the Fed­eral Re­serve this week reined in its fore­cast for in­ter­est-rate hikes in 2016. Fu­tures sig­naled the Stan­dard & Poor's 500 In­dex will rise for a third day and au­tomak­ers led gains in Europe as a weaker euro boosted earn­ings prospects. U.S. crude was lit­tle changed, af­ter soar­ing 11 per­cent in the last two days. Trea­suries ad­vanced and 10-year yields sank to a record low in Ja­pan. More than $3.5 tril­lion has been added to the value of global eq­ui­ties this month and com­modi­ties have ral­lied amid cen­tral bank steps to spur growth. The Fed's move com­ple- mented a wave of mon­e­tary eas­ing that saw Nor­way and In­done­sia cut bor­row­ing costs on Thurs­day, a week af­ter the Euro­pean Cen­tral Bank boosted stim­u­lus. The Peo­ple's Bank of China loos­ened lenders' re­serve re­quire­ments at the start of this month.

"We've fi­nally seen some signs of a light at the end of the tun­nel," said Wil­liam Hobbs, head of in­vest­ment strat­egy at Bar­clays Plc's wealth-man­age­ment unit in Lon­don. "Cen­tral banks will re­main ac­com­moda­tive and this has brought a bit of an in­crease in risk ap­petite." The MSCI Emerg­ing Mar­kets In­dex rose 0.8 per­cent at 10:06 a.m. in Lon­don, bring­ing gains from a low in Jan­uary to just shy of the 20 per­cent thresh­old of a bull mar­ket. Tech­nol­ogy stocks led the ad­vance af­ter Ten­cent Hold­ings Ltd., Asia's big­gest In­ter­net com­pany, posted a bet­ter-than-ex­pected 45 per­cent jump in quar­terly sales.

The Hang Seng China En­ter­prises In­dex of main­land stocks listed in Hong Kong rose 1.2 per­cent, fol­low­ing a 2.4 per­cent rally on Thurs­day. The Shang­hai Com­pos­ite In­dex jumped 1.7 per­cent, with trad­ing vol­umes 59 per­cent above the 30-day av­er­age, ac­cord­ing to data com­piled by Bloomberg.

New-home prices gained in 47 Chi­nese cities in Fe­bru­ary, com­pared with 38 in Jan­uary, the Na­tional Bureau of Sta­tis­tics said Fri­day, sig­nal­ing ef­forts to clear a home glut may be bear­ing fruit af­ter banks eased credit and the govern­ment re­laxed curbs.

The Stoxx Europe 600 In­dex climbed 0.5 per­cent. Daim­ler AG and BMW AG led gains among car­mak­ers.

Amid one of the weak­est earn­ings sea­sons in at least nine years and os­cil­lat­ing faith in cen­tral banks, strate­gists have slashed ex­pec­ta­tions for Euro­pean stocks, paint­ing the gloomi­est an­nual out­look in five years. The Euro Stoxx 50 In­dex is ex­pected to ad­vance 1 per­cent by the end of 2016. Only a few months ago, those same strate­gists were call­ing for a 12 per­cent rally.

S&P 500 fu­tures rose 0.2 per­cent, as the equity gauge ap­proaches its break-even level for the year. The Dow Jones In­dus­trial Av­er­age on Wed­nes­day erased its 2016 losses, as a weaker dol­lar spurred a rally in com­mod­ity pro­duc­ers and in­dus­trial shares that spread to the broader U.S. stock mar­ket.

The Bloomberg Dol­lar Spot In­dex, which tracks the green­back against 10 ma­jor peers, gained 0.2 per­cent fol­low­ing a two­day slide of more than 2 per­cent that drove it to an eight-month low. The Fed cited weaker global growth and tur­moil in fi­nan­cial mar­kets for its de­ci­sion to re­duce the num­ber of in­ter­est-rate in­creases fore­cast for 2016. The U.S. cur­rency added 0.5 per­cent to $1.1264 per euro, af­ter fall­ing 1.9 per­cent in the past three days. A gauge of 20 emerg­ing-mar­ket cur­ren­cies fell for the first time in three days, slip­ping 0.2 per­cent from a four-month high, as South Africa's rand, Rus­sia's ru­ble and Turkey's lira lost at least 0.5 per­cent. The won strength­ened 0.9 per­cent, cap­ping a 2.6 per­cent weekly ad­vance.

West Texas In­ter­me­di­ate oil slipped 0.3 per­cent to $40.09 a bar­rel, re­treat­ing from a three-month high. In ad­di­tion to the dol­lar's de­cline, crude was sup­ported this week by data show­ing U.S. out­put fell to the low­est level since Novem­ber 2014 as well as a planned freeze on pro­duc­tion by coun­tries in­clud­ing Saudi Ara­bia and Rus­sia.

Gold headed for a weekly gain as the dol­lar dropped. Bul­lion for im­me­di­ate de­liv­ery was lit­tle changed at $1,257.49 an ounce, putting gains for the week at 0.6 per­cent. Sil­ver touched the high­est level in more than four months.

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