09 Nov 2009
Nov. 9 (Bloomberg) -- Stocks and commodities rallied and the dollar plunged after the Group of 20 nations agreed to maintain measures to boost economic growth and remained silent on the U.S. currency's weakness. Gold advanced to a record.The MSCI World Index of equities in 23 developed countries increased 0.9 percent at 12:05 p.m. in London and futures on the Standard & Poor's 500 Index climbed 0.9 percent. Russia's Micex Index added 3.7 percent. Gold gained as much as 1.3 percent to $1,109.50 an ounce and crude oil jumped 2 percent. The dollar weakened against all 16 major currencies tracked by Bloomberg.
Policy makers from the U.S., U.K., Japan and 17 nations said on Nov. 7 that it's too early to withdraw spending intended to revive growth. European Central Bank President Jean-Claude Trichet said before the G-20 meeting that "excessive volatility" in currency markets is damaging and a strong dollar is important for global economic stability.
"Markets don't need to be worried that these governments and central banks are suddenly going to take away all the stimulus measures," Stuart Bennett, a senior currency strategist at Calyon in London, said in an interview on Bloomberg Television. "Risk appetite should remain supported into the end of the year."
Equities extended gains after Germany's Economy Ministry said industrial output rose 2.7 percent in September, beating the median estimate of 1 percent in a Bloomberg survey of 37 economists.
European, Asian Stocks
Europe's Dow Jones Stoxx 600 Index rallied 1.6 percent as all 19 industry groups advanced. Allianz SE, Europe's biggest insurer, added 5.7 percent in Frankfurt after saying third- quarter profit more than doubled to 1.32 billion euros ($2 billion), beating analysts' estimates.
The MSCI Asia Pacific Index climbed 1 percent. Axa Asia Pacific Holdings Ltd., the Australian unit of France's biggest insurer, surged 33 percent after it rejected an unsolicited $10 billion bid from parent Axa SA and wealth manager AMP Ltd. in Asia's largest takeover offer this year.
The gain in U.S. futures indicated that the S&P 500 may rise for a sixth straight day. U.S. stocks halted a two-week retreat last week, climbing 3.2 percent in the five-day period after worker productivity, manufacturing and home sales beat economists' projections and Warren Buffett's Berkshire Hathaway Inc. made its biggest purchase. Berkshire said in a filing on Nov. 6 that "the credit crisis has abated," bolstering the firm's earnings potential.
Emerging Markets
Developing-nation stocks headed for the biggest four-day gain in two months as the MSCI Emerging Markets Index climbed 1.7 percent, bringing its four-day increase to 5.4 percent. Hungary's Budapest Stock Exchange Index jumped 3.2 percent, Poland's WIG20 Index advanced 2.4 percent and Turkey's ISE National 100 Index gained 2 percent.
Emerging-market currencies strengthened, lifting the forint 1 percent against the euro and pushing the rand up 1.3 percent against the dollar to a two-week high.
The dollar weakened to $1.50 against the euro for the first time since Oct. 26, depreciating to $1.5011. The Dollar Index, which tracks the U.S. currency against six trading partners, slid to 74.977, the lowest level in more than two weeks.
Treasuries fell as the U.S. prepared to sell a record $81 billion of 3-, 10- and 30-year debt this week. The yield on the 10-year note rose 2 basis points to 3.51 percent, according to BGCantor Market Data. The week's sales begin today with $40 billion of three-year notes. The Treasury is scheduled to sell $25 billion of 10-year debt tomorrow and $16 billion of 30-year bonds on Nov. 12.
Health Care
The U.S. House on Nov. 7 approved health-care legislation that would cost more than $1 trillion over 10 years, indicating the government will have to increase its debt sales to pay for it. The government and Federal Reserve have also lent, spent, or guaranteed $11.6 trillion to revive the world's largest economy after the collapse of subprime mortgages froze credit markets in August 2007, triggering almost $1.7 trillion of writedowns and credit losses at the world's largest financial institutions.
While countries from Germany and France to Hong Kong have exited recessions, a Labor Department report on Nov. 6 showed that the U.S. unemployment rate climbed to a 26-year high of 10.2 percent last month.
Gold for immediate delivery headed for a ninth consecutive annual increase, the longest stretch since at least 1948. Copper for delivery in three months advanced 1.7 percent to $6,597 a metric ton, leading gains in industrial metals. Oil for December delivery rose as high as $78.95 a barrel in New York.
Wheat, corn and soybeans advanced in Chicago a day before the U.S. Department of Agriculture is scheduled to release its latest crops forecasts.
The cost of protecting European high-yield corporate bonds from default fell to the lowest level in more than a week. The Markit iTraxx Crossover Index of credit-default swaps dropped 16 basis points to 514.5, according to JPMorgan Chase & Co.
