U.S. benchmark stock indexes extended all-time highs and 10-year Treasury yields approached 3 percent for the first time since September as a drop in jobless claims fueled optimism in the economy. The yen slid on speculation the central bank will press ahead with stimulus.
The Standard & Poor’s 500 Index rose 0.5 percent to 1,842.02 at 4 p.m. in New York. Ten-year Treasury yields gained one basis point to 2.99 percent. The yen slid 0.4 percent to 104.72 per dollar after touching 104.84, the weakest level since October 2008, and the Topix rose 1.7 percent. The Borsa Istanbul 100 Index (XU100) dropped 2.3 percent and Turkey’s lira fell to a record low after a cabinet overhaul. Silver jumped 1.7 percent, oil reached a two-month high and gasoline climbed to the highest since September.
U.S. initial jobless claims fell more than forecast last week to 338,000, underscoring confidence in the labor market as the Federal Reserve begins slowing its bond purchases amid improving economic data. The S&P 500 is up 29 percent in 2013, poised for its best yearly gain since 1997.
“The stock market is energized by the stronger macro trends that we’re seeing,” Jim Russell, who helps oversee $112 billion as a senior equity strategist for U.S. Bank Wealth Management, said by phone. “The fundamentals are filling in for a market that has been primarily Fed-driven.”
Silver, zinc and lead rose at least 0.7 percent for the biggest gains among the 24 commodities tracked by the S&P GSCI Index, while corn, soybeans and cocoa fell more than 1 percent. Crude oil gained 0.3 percent to a two-month high of $99.55 a barrel in New York.
Gasoline futures rose to a three-month high of $2.82 a gallon as supplies in the Northeast may fall on refinery shutdowns and greater demand during the holiday season. Delta Air Lines Inc.’s Pennsylvania refinery, which serves the New York Harbor area, delivery point for futures contracts, plans to shut units next week for work. AAA, the biggest U.S. motoring club, said the number of automobile travelers from Dec. 21 to Jan. 1 will jump to a record 85.8 million.
Platinum futures jumped 2 percent to $1,363.80 an ounce in New York, the biggest gain for a most-active contract since October, on speculation a global economic recovery will boost demand for the metal used in catalytic converters, leaving a supply shortage. The London Metal Exchange was closed for holiday.
The S&P 500 Index closed at a record high on Dec. 24 for a third straight day as data on U.S. durable goods and new homes sales beat analyst estimates.
Exxon Mobil Corp., Home Depot Inc. and International Business Machines Corp. rose more than 1.1 percent for the biggest gains in the Dow Jones Industrial Average. Energy, industrial and health-care shares led an advance in nine of the 10 main S&P 500 industries.
Tesla Inc. gained 2.7 percent on a report that the electric car maker will focus on opening more showrooms in China next year. EBay Inc. fell 2 percent as data showed a slowdown in sales growth.
Jobless claims declined by 42,000 to 338,000 in the week ended Dec. 21, a Labor Department report showed today. The median forecast of 42 economists surveyed by Bloomberg called for a drop to 345,000. Continuing claims rose. The Fed said on Dec. 18 that it will reduce the pace of bond buying amid faster-than-estimated economic growth.
The yen reached a five-year low versus the dollar and Japan’s Topix closed at the highest since 2008
The yen retreated against 14 of its 16 major peers. It dropped 0.5 percent to 143.43 per euro, after touching 143.54, the weakest level since October 2008. The yield on Japan’s benchmark 10-year note added 1.2 basis points to 0.71 percent, the highest since September.
Japan’s currency lost 16 percent against the dollar this year, the biggest decline among 16 major currencies after the South African rand’s 18 percent drop, amid speculation the BOJ will continue unprecedented stimulus that debases the currency, while the Fed pares quantitative easing as the U.S. economy recovers.
Bank of Japan Governor Haruhiko Kuroda said Japan is on track to achieve its 2 percent inflation target. The central bank buys more than 7 trillion yen ($67 billion) of the nation’s bonds every month to battle deflation. Minutes of last month’s Bank of Japan policy meeting showed one board member said a slowdown in growth could represent a downward shift in trend.
“The fact that BOJ members are concerned that improvement in growth, jobs, and consumer prices may not be as robust as before signals they will take some kind of measures going forward,” said Takahiro Sekido, who worked at the BOJ before joining Bank of Tokyo-Mitsubishi UFJ Ltd. as a Japan strategist. “Dollar-yen could test 105 as economic data in the U.S. continue to improve.”
The Topix (TPX) ended at 1,279.34, the highest level since August 2008, extending this year’s rally to 49 percent, the most among 24 major developed markets tracked by Bloomberg. Toyota Motor Corp., the world’s biggest carmaker, jumped 2.9 percent in Tokyo. Nissan Motor Co. (7201), which sells more vehicles in China than any other Japanese automaker, said it was “closely monitoring” developments in Japan-China ties after Prime Minister Shinzo Abe visited a shrine memorializing war-dead on Chairman Mao Zedong’s birthday.
Turkey’s benchmark stock slid to the lowest losing level since August 2012 after Prime Minister Recep Tayyip Erdogan replaced 10 ministers amid a corruption probe that led three ministers to resign yesterday. Environment and Urban Works Minister Erdogan Bayraktar, an associate of Prime Minister Erdogan for two decades, resigned and called for the premier to step down too. Erdogan responded by reshuffling his cabinet.
Turkey’s central bank said Dec. 24 it would sell at least $6 billion through the end of January and make it more costly for lenders to park foreign currencies in its coffers. The lira, this month’s worst-performer in emerging Europe and Africa, rallied 1 percent that day after Basci announced the new tightening measures.
The MSCI Asia Pacific Index rose 0.4 percent, gaining for an eighth day and poised for the longest rally in three months.
China’s stocks fell, led by coal and auto shares, amid investor disappointment the government didn’t take further measures to ease a cash crunch. Money-market rates eased for a third day. The Shanghai Composite Index (SHCOMP) lost 1.6 percent to 2,073.10 at the close, the lowest level since Aug. 23.
The People’s Bank of China didn’t conduct reverse-repurchase operations today, after injecting funds into the inter-bank market for the first time in three weeks on Dec. 24 to ease a cash crunch.
China’s seven-day repurchase rate, a gauge of funding availability in the banking system, dropped 30 basis points to 5.33 percent, according to a daily fixing by the National Interbank Funding Center.
The country’s economic growth this year is likely to come in at 7.6 percent, compared with the government’s 7.5 percent target, Xinhua News Agency said, citing a report by the State Council. A 7.6 percent pace would mark a third straight annual drop in the expansion rate.
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