Stocks Gain With Dollar Before Jobs Data as Gold Drops

By Nick Gentle and Cecile Vannucci  

Photographer: Tomohiro Ohsumi/Bloomberg

Demonstrators gestures as they gather outside the Chief Executive's office in Hong... Read More

Stocks rose around the world, with the European benchmark index recovering from its biggest loss in 15 months, and the dollar strengthened before a U.S. jobs report. Most government bonds retreated and gold was close to erasing this year’s advance.
The MSCI All-Country World Index ended a four-day slide as the Stoxx Europe 600 Index gained 0.6 percent at 11:27 a.m. in London, and Standard & Poor’s 500 Index futures added 0.5 percent. The dollar rose versus all but one of its 16 major peers. German 10-year yields rose three basis points to 0.93 percent and the rate on similar-maturity U.K. gilts increased four basis points to 2.36 percent. Gold fell 0.7 percent.
Today’s U.S. jobs report will help investors assess the strength of the world’s largest economy. Analysts forecast a return to gains of more
than 200,000 in monthly nonfarm payrolls. European shares are rebounding after slumping yesterday on concern the European Central Bank asset-buying plan won’t be enough to revive growth and avoid deflation. In Hong Kong, a city official agreed to talks to diffuse a week-long pro-democracy protest.
“People will be poring over U.S. data today to see if the economy is strong enough for the Fed to start raising interest rates,” Andrea Williams, who helps oversee 50 billion pounds ($80 billion) at Royal London Asset Management, said by phone from London. “It’s a bit of a bounce for European markets from yesterday’s selloff. The lack of new news from ECB yesterday disappointed markets. The ECB is still there in the background, ready to do more if needed.”

Photographer: Lam Yik Fei/Bloomberg

Demonstrators gather outside the Hong Kong Garrison headquarters of People's Liberation... Read More

Weekly Drop

The MSCI All-Country World Index rose today, trimming its weekly decline to 2.3 percent. It closed at its lowest level since April yesterday.
The Stoxx 600 rose today, rebounding from its lowest level since Aug. 15. It’s heading for a 2.5 percent weekly drop. All industry groups increased today, with travel and leisure shares climbing the most, as EasyJet Plc advanced 6.7 percent after saying full-year pretax profit jumped at least 20 percent. Banks posted the second-biggest gain as a group after a 3.3 percent slump yesterday.
Iliad SA fell 0.8 percent after people familiar with the matter said it plans to bid for a bigger stake in Deutsche Telekom AG’s U.S. unit than it originally sought.
Futures on the S&P 500 expiring in December rose after the index closed little changed, near its lowest level since Aug. 12. It’s fallen 1.9 percent this week, a second consecutive decline for the first time since May.

Jobs Report

U.S. employers hired 215,000 workers in September, according to the median economist forecast in a Bloomberg News survey. The Labor Department report is due at 8:30 a.m. in Washington. Payrolls rose by a worse-than-estimated 142,000 people in the previous month, the first increase of less than 200,000 since January. Data from the Roseland, New Jersey-based ADP Research Institute showed this week that U.S. companies employed more workers last month than predicted.
The Bloomberg Dollar Spot Index, up 0.4 percent today, headed for a seventh weekly gain, its longest run since June 2010, as improving U.S. data adds to speculation the Federal Reserve will raise interest rates next year.
The dollar rose 0.5 percent to 108.95 yen, after touching 110.09 yen on Oct. 1, the strongest level since 2008. It gained 0.4 percent to $1.2615 per euro.
The U.S. currency has jumped 6.9 percent in the past three months, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen weakened 0.5 percent and the euro declined 1.8 percent.

Yen Drop

The yen fell the most in a week versus the dollar as the Bank of Japan bought a record 3.5 trillion yen ($32.2 billion) in treasury bills, part of its policy of monetary easing to spur inflation. Japan’s currency also fell as central bank Governor Haruhiko Kuroda said a lower exchange rate isn’t a minus for the economy overall and Prime Minister Shinzo Abe pledged assistance for smaller companies hurt by the yen’s drop.
Traders saw a 74 percent chance the Fed will raise its target for overnight lending between banks by its September 2015 meeting, futures (SPX) data compiled by Bloomberg showed yesterday. Policy makers have kept the target rate in a range of zero to 0.25 percent since 2008 to support the economy.
Treasuries were little changed before the nonfarm payrolls data after declining yesterday. The 10-year yield was at 2.44 percent. Bonds in Europe were mostly lower as investors weighed the prospects for additional ECB easing measures following yesterday’s interest-rate decision. France’s 10-year yield increased two basis points to 1.27 percent and the rate on similar-maturity Dutch debt climbed to 1.07 percent.

Peripheral Countries

The average yield on bonds sold by companies in Europe’s peripheral countries fell to a record 1.19 percent this week, while those in the region’s core countries dropped to an all-time low of 1.24 percent, according to Bank of America Merrill Lynch indexes. The yield difference widened to 0.06 percentage point yesterday, the biggest since September 2009.
The MSCI Emerging Markets Index climbed 0.4 percent, halting a six-day slump that sent the measure to its most oversold level since June 2013 and valuations to the lowest since May 13.
Russian equities ended a two-day loss, with the Micex Index adding 0.6 percent. The gauge is down 3.5 percent this week, the most since July. The ruble depreciated for the sixth time in seven days, losing 0.5 percent versus the dollar.

Talks Agreement

The Hang Seng Index (HSI) increased 0.6 percent, reversing earlier losses as it opened after a two-day break. The Hang Seng China Enterprises Index of mainland companies listed in the city rose 0.4 percent. Hong Kong’s top official Leung Chun-ying agreed to demands by student leaders for talks after protests disrupted some of the city’s busiest areas.
Taiwan’s Taiex Index jumped the most in a year. Financial Supervisory Commission Chairman William Tseng will announce measures to boost the stock market as early as next week, the Commercial Times reported, without saying where it got the information.
Indonesian shares dropped 1 percent on concern President-elect Joko Widodo will struggle to implement reforms.
Gold for immediate delivery fell to $1,206.34 an ounce, according to Bloomberg generic pricing. The precious metal retreated 1 percent this week, cutting its 2014 increase to 0.4 percent. Platinum declined as much as 2.1 percent to $1,241.63 an ounce, the lowest since 2009.
Brent crude oil dropped 0.3 percent to $93.15 a barrel. It’s extending a three-day loss on speculation that Saudi Arabia will maintain output amid swelling supplies from the U.S. and Russia and signs of slowing demand.