- S&P 500 halts two-day slide, turns positive for the year
- Ten-year Treasury notes drop, commodities index surges
The Standard & Poor’s 500 Index halted a two-day slide and the MSCI All-Country World Index cut its loss for the year to 3.5 percent. European stocks rebounded in thin trading, trimming their worst December drop since 2002. Oil gained above $37 a barrel amid forecasts for falling U.S. stockpiles. The Australian and New Zealand dollars gained with the Norwegian krone. Treasury rates on 10-year notes rose three basis points.
“Financial markets have had a tendency this year to focus on only one thing at a time, and at the moment it’s oil,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit. “There’s a lot of nervousness that’s stemming from the continued decline in oil prices.”
The global oil glut and China’s economic weakness are fanning the biggest annual drop in commodity prices in seven years, according to a Bloomberg gauge of raw materials. That’s undermining corporate earnings and hindering central bank attempts to ignite inflation. Global equities are on track for the worst year since 2011, while the S&P 500 is flat for the year. The Bloomberg Commodity Index is down about 25 percent in 2015, while global bonds lost 2.4 percent, according to a Bank of America Merrill Lynch index.
The S&P 500 rose 0.9 percent at 11 a.m. in New York, climbing back into positive territory for the year. Stocks are defying the historical trend of gains in the final month of the year, with the benchmark index down by 0.3 percent, after a series of sharp rallies and selloffs.
The Stoxx Europe 600 Index added 1.1 percent. The European benchmark is down 4.4 percent this month amid a disappointing increase in European Central Bank stimulus, along with the commodity rout. The index lost a big part of its annual advance amid concern over global growth, just as the Federal Reserve raised its interest rates for the first time in almost a decade.
After surging as much as 21 percent to a record in April, the Stoxx 600 slid 12 percent through yesterday. It’s still up 7.3 percent this year, poised for a fourth annual advance.
The MSCI Asia Pacific Index climbed 0.4 percent. The measure is heading for its first back-to-back annual loss since 2002 as a deceleration in the region’s biggest economy and the fall in oil and commodity prices undermined earnings.
West Texas Intermediate crude advanced 2.2 percent to $37.63 a barrel while Brent traded 2.7 percent higher at $37.60.
U.S. crude inventories probably fell for a second week, according to a Bloomberg survey before government data Wednesday. Saudi Arabia’s 2016 spending plan assumes a Brent price of $37 a barrel, according to John Sfakianakis, a Riyadh-based economist at Ashmore Group Plc and a former government adviser.
Natural gas advanced 3.6 percent in the U.S. to $2.307 per million British thermal units, adding to a surge of 10 percent on Monday. Futures have posted a record late-December rally as unseasonably warm weather conditions that had curbed demand for heating fuel are forecast to end. The price of the fuel in the U.K. rose to 34.85 pence a therm.
Gold for immediate delivery rose 0.1 percent to $1.069.95 an ounce. The metal is heading for a third annual decline as expectations for tighter monetary policy in the U.S. curb demand for the metal. Silver increased 0.6 percent and platinum added 1.1 percent.
Copper gained 2.4 percent to $212.90 a pound in New York, paring a drop of 2.1 percent on Monday that was spurred by concerns about the strength of demand in China. Nickel fell 0.4 percent in London on the first day of trade after a U.K. public holiday, while zinc added 2.7 percent.
The Bloomberg Dollar Spot Index gained 0.2 percent. The gauge that tracks the U.S. currency against 10 of its most-traded peers has retreated about 0.1 percent since Central bank increased the interest rate earlier in December.
The Norwegian and Australian currencies were among those that rose the most against the dollar, with the krone appreciating 0.2 percent to 8.6849. The Aussie jumped as much as 0.6 percent to 72.89 U.S. cents before being 0.4 percent firmer at 72.81 cents. New Zealand’s kiwi gained 0.3 percent to 68.69 U.S. cents. The three nations currencies have each still lost at least 10 percent against the dollar this year as prices of their key exports slid.
The euro dropped to $1.0918. The joint currency will fall about 4 percent against the dollar in 2016, according to the consensus of analyst forecasts compiled by Bloomberg, though two of the biggest participants in the market -- Barclays Plc and Bank of America Corp.’s Merrill Lynch unit -- expect it to drop through parity with the greenback.
Emerging-market equities fell, extending the biggest annual decline in four years, as persistent weakness in commodities weighs on the global growth outlook.
The MSCI Emerging-Markets Index dropped for a second day, with health care and utility stocks leading declines. A gauge tracking 20 currencies in developing nations retreated 0.1 percent, as Russia’s ruble weakened as much as 0.9 percent versus the dollar to a record low, before holding steady at 8:55 a.m. New York time.
The Tadawul All Share Index, Saudi Arabia’s benchmark stocks gauge, dropped as much as 3.4 percent after the kingdom announced one of its biggest shake-ups in economic policy. Forward contracts used to speculate on the riyal in the next year were poised for the highest level since March 1999.