More than $500 billion wiped off the value of U.S. stocks is providing opportunities for investors who remember that equities tend to rise when the Federal Reserve begins reducing efforts to stimulate the economy. The S&P 500 Index, which has fallen 2.5 % from its May 21 record, rallied an average 16 % over two years the last four times the central bank started raising interest rates. Demand for the Treasury securities most vulnerable to inflation is climbing to an almost two-year high as pension funds and insurance companies snap up discounted debt with consumer prices rising at the slowest since 2010. Hedge funds cut wagers on a gold rally for the first time in three weeks on mounting speculation central banks will curb record stimulus and as this year’s slump in bullion spurred losses for billionaire John Paulson. Bearish copper bets more than doubled as the metal had its longest slump since November. Cocoa holdings advanced to the highest since 2008 before the biggest weekly slide since January. Elsewhere, Japanese Prime Minister Shinzo Abe’s pledge to end 15 years of deflation has prompted the nation’s biggest banks to raise mortgage rates, mobilizing people to buy a home up to four years earlier than they had planned. Vale SA (VALE5), Brazil’s largest exporter, said further localcurrency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto and BHP. The real, the worst-performing emerging-market currency in the past three months is helping to bolster Brazil’s competitiveness. Emerging-market stocks rose a second day, led by Russian shares, as investors awaited this week’s Federal Reserve policy meeting. Turkey’s lira slumped after riot police stepped up their crackdown on protesters and their stocks tumbled too. Russia’s Micex Index advanced 2 %, Petroleo Brasileiro SA, Brazil’s state-controlled oil company, surged after selling $1.83 billion in assets. Venezuela’s bond yields increased as the nation’s credit rating was lowered by Standard & Poor’s. U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from last week’s decline, as investors weighed economic data with the prospects for stimulus cuts ahead of this week’s Federal Reserve policy meeting. The S&P 500 (SPX) rose 0.8 % to 1,639.04 at 4 p.m. in New York, after earlier gaining as much as 1.2 %. The Dow Jones Industrial Average added 109.67 points, or 0.7 %, to 15,179.85. European stocks rose to a one-week high, rebounding from their longest streak of weekly losses in 14 months, as investors awaited this week’s Federal Reserve meeting for signs on the pace of stimulus reduction. The STOXX Europe 600 Index rose 0.7 % to 293.25 at the close, for the first back-to-back gains this month. WTI crude slipped on speculation that the Federal Reserve may curb its stimulus policy after an index showed manufacturers in the New York area felt the most optimistic since March. WTI’s discount to Brent oil shrank to the narrowest level since 2011. Oil fell 8 cents before Fed policy makers start a two-day meeting tomorrow. Gold declined in New York before the Federal Reserve starts a two-day meeting as investors weighed when the central bank will taper asset purchases. Gold futures for August delivery lost 0.3 % to settle at $1,383.10 an ounce at 1:41 p.m. on the Comex in New York.
Posted on: Tue, 18 Jun 2013 01:14:01 +0000
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