U.S. Index Futures Climb With Gold, Oil; Ruble Slips
London (Dec 26) U.S. index futures rose, indicating benchmark indexes will reach records, and precious metals advanced with oil. The ruble trimmed its biggest weekly jump since 1998, while Russian shares climbed for a third day.
Standard & Poor’s 500 Index contracts and Dow Jones Industrial Average (INDU) futures added 0.2 percent at 8:06 a.m. in New York. Gold advanced 1.8 percent and silver jumped the most since Dec. 9, with crude oil gaining 0.9 percent. The ruble slipped 3.7 percent, while the Micex Index increased 1.3 percent. The Shanghai Composite Index posted its biggest two-day rally in five years amid speculation the government will step up stimulus. The yen headed for a second weekly decline.
Equity markets are rising this week, and U.S. stocks have regained their losses from earlier this month, with the Dow closing above 18,000 for two days. The ruble has strengthened amid speculation the government is ordering exporters to sell foreign currency. In China, the central bank plans to waive temporarily a requirement for lenders to set aside reserves for some deposits, people with knowledge of the matter said. Most markets in Europe and Asia are shut today for Boxing Day, while the U.S. reopens after the Christmas holiday.
“That the U.S. recovery is on firmer ground amid a ‘patient’ Fed is buoying sentiment towards risk assets further,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in an e-mail. “However, trading is thin and one shouldn’t read too much into this rally -- not least given the risk of a further slide in oil prices and the plethora of risks in emerging markets, in particular Russia.”
Both the S&P 500 and the Dow reached records this week after posting their biggest five-day rallies in three years. The Russell 2000 Index is 0.2 percent away from an all-time high reached in March.
The S&P 500 climbed 0.5 percent in the past three trading days, the Dow added 1.3 percent and the Russell 2000 increased 0.9 percent. U.S. stocks recovered losses from earlier this month as the Federal Reserve said it will be patient on the timing of interest-rate increases and the U.S. economy expanded at the fastest pace in more than a decade.
The MSCI All-Country World Index rose less than 0.1 percent today and has climbed 0.6 percent this week.
Today’s rebound in West Texas Intermediate is trimming its weekly loss to 0.2 percent. That would be a 12th decline in 13 weeks. Natural gas retreated 0.6 percent, heading for a fifth weekly decline.
Gold for immediate delivery climbed after prices dropped to near a three-week low on Dec. 24. Silver for spot delivery rose 3.2 percent and palladium increased 0.9 percent.
The dollar strengthened 0.3 percent versus the euro, taking the U.S. currency up for a second week.
The rate on 10-year Treasuries slipped two basis points to 2.25 percent. The extra yield on the 30-year debt over five-year notes shrank to a six-year low in Asia after declining oil prices spurred speculation that inflation will slow, fueling demand for longer maturities.
The ruble earlier rose as much as 1.7 percent against the dollar. It’s advanced 7.3 percent this week as companies made year-end tax payments and the government ordered exporters including OAO Gazprom to sell foreign-exchange revenue.
“Exporters have to sell, and while volumes aren’t that large, it’s enough to move this thin market,” Iskander Abdullaev, analyst at Sberbank CIB, said in e-mailed comments. “I think there was an instruction to calm down the rate until the end of the year, so that retail clients don’t panic before holidays, and take off pressure from the ruble.”
Russia’s benchmark stock index is trimming a fifth weekly drop, its longest streak since June 2013.
The Shanghai Composite Index advanced 2.8 percent today, bringing its two-day increase to 6.2 percent, the most since August 2009. The move by the People’s Bank of China highlights efforts to boost lending amid a slowdown in the world’s second-largest economy.
The yen weakened toward a seven-year low against the dollar after Japan’s consumer-price inflation slowed for a fourth month in November and industrial production shrank, adding to Prime Minister Shinzo Abe’s challenges in reviving the economy.
“The CPI results were almost in line with expectations but, excluding the tax hike, it looks quite weak,” said Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo. “The market is starting to imagine there might be more easing, and that is leading to yen selling.”