Bloomberg News

Stocks, Commodities Rise After Greece Approves Austerity Plan

February 21, 2012

Feb. 13 (Bloomberg) -- Global stocks rose, rebounding from the biggest loss of the year, and commodities climbed after Greek lawmakers approved austerity plans to secure rescue funds. Treasuries climbed, while the euro reversed early gains.

The MSCI All-Country World Index added 0.8 percent at 4:30 p.m. in New York after slumping 1.2 percent on Feb. 10. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,351.77. The euro was little changed at $1.3194, erasing a gain of as much as 0.7 percent. The S&P GSCI index increased 1 percent as 13 of 24 commodities advanced. Yields on 10-year Treasuries dropped one basis point to 1.98 percent.

The S&P 500 climbed to within 1 percent of a three-year high reached in April. Passage of the austerity bill puts the spotlight on a Feb. 15 meeting of euro-area finance ministers who must decide whether to approve the second bailout. Rioters protesting the measures battled police and set fire to buildings in downtown Athens. Italy met its target at an auction today, selling 12 billion euros ($16 billion) of bills as borrowing costs fell.

“We still think you should buy stocks,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut, said in a Bloomberg Television interview in London today. “It’s a continuation of the bull market and we’re encouraged by what we are seeing in Europe. I look at the markets, I find they are strong. There’s real buying going on. This is not short-covering or a temporary or transitory thing.”

Rally Resumed

The S&P 500 climbed for the fourth time in five days and rebounded from its first weekly loss of the year. The index, which is up 23 percent from last year’s low in October, trades for about 14 times its companies’ reported earnings and has been stuck below its five-decade average valuation of 16.4 since May 2010, the longest stretch since a 13-year span beginning in 1973, data compiled by Bloomberg show.

Financial, technology and industrial companies contributed the most to the advance in the S&P 500 as nine of 10 industry groups gained. Caterpillar Inc., United Technologies Corp. and Chevron Corp. rose more than 1 percent for the top gains in the Dow Jones Industrial Average, which increased 72.81 points to 12,874.04. Chesapeake Energy Corp. rose 2.4 percent after the natural-gas driller said it’s targeting as much as $12 billion in asset sales and joint ventures this year.

Apple Inc. advanced 1.9 percent to exceed $500 a share for the first time, as a two-week gain spurred by the iPhone maker’s first-quarter earnings report approached 20 percent.

‘Key Stocks’

“Apple is one of the key stocks in the whole market and it’s really driving things right now,” said Steve Kilcullen, head of flow derivatives sales for the Americas at Nomura Holdings Inc. in New York. “No one expected this move we’re seeing after they crushed earnings.”

More than 50 companies in the index are scheduled to report results in the coming week, data compiled by Bloomberg show, including Deere & Co. and Comcast Corp. Per-share profits have topped analyst estimates at 70 percent of the 331 companies that released results since Jan. 9, data compiled by Bloomberg show. Earnings-per-share have increased 3.9 percent for the group on 7 percent sales growth.

President Barack Obama sent Congress a $3.8 trillion budget plan today with stimulus spending and tax increases for the wealthiest Americans, spelling out election-year priorities that are certain to draw Republican opposition. Obama is proposing more money for jobs, highways and bridges, schools, student aid and manufacturing research as well as higher taxes for corporations, banks and oil, natural gas and coal companies.

The U.S. dollar weakened against 12 of 16 major peers and the Dollar Index, which tracks the U.S. currency against those of six trading partners, dropped 0.2 percent. The New Zealand dollar surged 0.9 percent against the greenback, while the Australian dollar advanced 0.6 percent.

European Stocks

The Stoxx Europe 600 Index rallied 0.7 percent as almost three stocks gained for every one that fell. Cable & Wireless Worldwide Plc surged 45 percent after Vodafone Group Plc, the world’s largest mobile-phone company, said it’s in early stages of evaluating a potential offer for the company.

The extra yield investors demand to hold Italian 10-year bonds instead of benchmark German bunds fell three basis points to 367 basis points. Italy sold 365-day bills priced to yield 2.23 percent, down from 2.735 percent last month. Germany auctioned 3.01 billion euros of six-month debt.

The cost of insuring against default on European government bonds fell for the first time in four days. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments declined 0.8 basis point to 328.

Oil Embargo

Oil in New York climbed 2.3 percent to a one-month high of $100.91 a barrel. Overseas Shipholding Group Inc., the largest U.S. crude-tanker owner, said on Feb. 10 that the pool in which its ships operate will no longer go to Iran after the European Union agreed to an oil embargo. Natural gas declined 1.9 percent for the biggest drop among 24 commodities in the S&P GSCI Index.

The MSCI Emerging Markets Index added 1 percent, following a 1.8 percent slide on Feb. 10, the biggest drop since November.

The Tel Aviv Stock Exchange’s benchmark TA-25 Index was down 0.1 percent after Israeli embassy personnel came under attack in India, leaving four people injured, and an attempt to blow up an Israeli car in Georgia was thwarted. Prime Minister Benjamin Netanyahu blamed both incidents on Iran.

Russia’s Micex Index jumped 2.3 percent as oil producers rose. Erste Group Bank AG helped lead the Czech PX Index 2 percent higher. Benchmark indexes Hungary, Poland, South Africa and Turkey gained at least 0.9 percent. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 0.6 percent.

--With assistance from Claudia Carpenter, Abigail Moses, Andrew Rummer, Daniel Tilles and Jason Webb in London, Lynn Thomasson in Hong Kong and Jeff Kearns in New York. Editors: Michael P. Regan, Jeff Sutherland

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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