European shares and emerging-market equities climbed for the first time in two weeks after China’s central bank boosted stimulus. The dollar strengthened before the Federal Reserve announces its interest-rate policies.
The Stoxx Europe 600 Index gained 0.6 percent at 11:24 a.m. in London, and the MSCI Emerging Markets Index rallied 0.8 percent. Standard & Poor’s 500 Index futures were little changed, while the U.S. currency advanced versus its Australian and South African counterparts. Treasury 10-year notes rose. Russian stocks fell, led by AFK Sistema and its oil and mobile-phone businesses, after the holding’s billionaire owner, Vladimir Evtushenkov, was placed under house arrest.
The dollar slid yesterday on speculation the Fed will maintain today its pledge to keep rates low for a “considerable time” after ending asset
purchases. Inflation in the U.S. was probably unchanged in August from the previous month, economists forecast before today’s report. In the euro area, it was higher than initially projected. China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter.
“The Fed will probably say they will continue to taper quantitative easing to have it end in October or November, and continue low rates for long,” said James Butterfill, head of global equity strategy at Coutts & Co. in London. His firm manages 28.7 billion pounds ($47 billion) globally. “I don’t think we’ll have clarity on when the first rate hike will be. They will leave that one open purely because there have been a few weaker data points.”
European Stocks
The Stoxx 600 climbed after falling 1.7 percent from a two-month high on Sept. 4 through yesterday’s two-week low. Eighteen of its 19 industry groups advanced today, with commodities producers gaining the most. The MSCI All-Country World Index rose 0.2 percent, up for a second day.Inditex SA (ITX) fell 2.4 percent after Europe’s largest clothing retailer reported a decline in profit for the first half of 2014. Cie. Financiere Richemont SA dropped 3.5 percent after the world’s largest jewelry maker posted the slowest start to a year since the global recession, with five-month sales growth missing analyst estimates.
A report today showed that annual inflation in the euro area was 0.4 percent in August, unchanged from July, according to the European Union’s statistics office. That’s above Eurostat’s Aug. 29 estimate of 0.3 percent.
Fed Decision
In the U.S., the Fed will announce its monetary-policy decisions at 2 p.m. in Washington and Chair Janet Yellen will hold a press conference 30 minutes later. The central bank may reduce monthly bond purchases by $10 billion to $15 billion, keeping it on track to announce an end to the program in October, economists forecast.A Bloomberg News survey of economists published yesterday was almost evenly divided on whether the Fed will retain the “considerable time” reference today. Wall Street Journal reporter Jon Hilsenrath said in a Web video that he thinks policy makers will maintain their pledge to keep benchmark overnight rates low for a “considerable time” after the bank ends its asset purchases.
Futures on the S&P 500 expiring in December were little changed today after the index climbed 0.8 percent yesterday, the most since Aug. 18. It closed 0.4 percent below its record reached Sept. 5.
Adobe Drops
Adobe Systems Inc. (ADBE) lost 4.3 percent in early New York trading after the software maker reported quarterly sales that missed the average analyst estimate.The dollar advanced to 10.9326 rand and 90.65 cents per Aussie dollar. It was little changed at $1.2969 per euro. The Bloomberg Dollar Spot Index was little changed after its biggest loss in three months yesterday pushed it down from near the strongest level in more than a year.
The yield on 10-year Treasury notes fell two basis points, or 0.02 percentage point, to 2.57 percent.
Traders see a 56 percent chance the Fed will increase its benchmark rate to at least 0.5 percent by July 2015, federal-fund futures (SPX) data showed yesterday. That compares with a 46 percent probability seen a month ago. Policy makers have kept their target for overnight lending between banks in a range of zero to 0.25 percent since December 2008.
Emerging Markets
The MSCI Emerging Markets Index rallied 0.8 percent, advancing for the first time in 10 days. The MSCI AC Asia Pacific Index (MXAP) ended its longest losing streak since June 2002.The People’s Bank of China will funnel 100 billion yuan each to the five biggest banks for a three-month period, said the official, who asked not to be identified because the measure hasn’t been formally announced. The credit expansion builds on targeted measures to shore up growth while stopping short of broad-based monetary and fiscal stimulus that increases dangers from bad loans.
Sony Corp. slumped 11 percent in Germany after widening its full-year net loss forecast. The maker of PlayStation video games and electronics also suspended its dividend for the first time since its 1958 listing.
The Micex Index (INDEXCF) fell 2 percent, heading for its biggest plunge since July 21. Sistema tumbled 32 percent, OAO Bashneft, an oil producer, dropped 23 percent and OAO Mobile TeleSystems, Russia’s biggest mobile-phone company, slid 7.2 percent.
Evtushenkov Arrest
Evtushenkov’s arrest on suspicion of money laundering stems from a probe into Bashneft, an oil producer Sistema acquired in 2009, the Investigative Committee said late yesterday in Moscow. Sistema said the accusations were “completely groundless” and vowed to use all possible legal means to make their case.Investors are also watching the final day of campaigning over Scotland’s future in the U.K. before a vote on independence tomorrow. Three polls last night showed the anti-independence group leading the Yes campaign by 52 percent to 48 percent, excluding undecided voters.
The U.K.’s FTSE 100 Index (UKX) rose 0.4 percent today after two days of losses, as a report showed unemployment in the nation fell to the lowest level in six years. Bank of England policy makers split for a second month, with the majority citing increased risks from Europe and muted inflation pressures supporting the case for keeping the key rate at a record low, according to minutes from their last meeting.
The pound strengthened, adding 0.1 percent to $1.6298 and 79.55 pence per euro.
The Bloomberg Commodity Index (BCOM) declined 0.1 percent, with aluminum falling 0.8 percent. Copper rose 0.4 percent to $6,930 a metric ton after advancing 1.2 percent yesterday. China is the biggest buyer of industrial metals.
West Texas Intermediate oil climbed 0.2 percent to $95.03 a barrel after jumping 2.1 percent yesterday. U.S. crude inventories probably dropped last week, according to analysts surveyed by Bloomberg before the Energy Information Administration report at 10:30 a.m. in Washington.
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