US stocks rise, bonds pare gains on easing tension in Ukraine
The MSCI Emerging Markets Index retreated 0.6% on Friday, poised for a second weekly decline. Photo: AFP
New York: The Standard & Poor's 500 Index rose, while treasuries and the yen pared gains as signs that Russia is de-escalating tension in Ukraine outweighed concern about crises in the Middle East.
The S&P 500 added 0.7% at 1:06 pm in New York, trimming its decline this week to 0.1%. The Stoxx Europe 600 Index dropped 0.6%, capping its first back-to-back weekly losses since March that sent benchmark gauges in France and Germany down more than 10% from their highs. Ten-year treasury yields sank to the least in more than a year as government bonds rose around the world. Brent crude climbed 0.4%. The yen rose 0.3% versus the dollar.
Russia's defence ministry said warplanes had ended drills in the region near Ukraine. RIA Novosti earlier reported that Russia offered to mediate between the government in Ukraine and the separatists that it's battling. President Barack Obama approved airstrikes in Iraq, and rocket attacks marked the end of a ceasefire between Israel and Hamas. More than $1.8 trillion has been erased from the value of equities worldwide in the past two weeks.
'The market is looking abroad today-at Russia and Iraq, and with Russia it's going to be a little bit of relief for the market rather than anything else,' John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. 'In Iraq, the market is looking at whether this situation will affect the oil flow.'
The S&P 500 fell 0.6% on Thursday, coming within 60 points away from wiping out its gains for 2014. It closed below its average price for the past 100 days for the first time since April. The index has dropped 3.6% from a record on 24 July.
US stocks bounced back on Friday amid speculation that recent declines have been excessive. Almost 80% of stocks in the S&P 500 are below their average price of the past 50 days, the most since 2012, according to data compiled by Bloomberg. All but one of the 10 main industries in the index are oversold, a report from Bespoke Investment Group LLC showed.
'When you see the geopolitical news in Russia and the Middle East, it's horrible from a humanitarian point of view for US equities, but how bad is it for US economic fundamentals?' Michael Purves, chief global strategist and head of equity derivatives research at Weeden & Co. in Greenwich, Connecticut, said in a phone interview. 'It's pretty distant. We've had a big selloff since the highs in July and in my estimations, this has been a pretty orderly retreat spurred by overstretched market conditions.'
Among stocks moving on Friday, jumped 5.6% after reporting sales that topped estimates. Nvidia Corp. jumped 7.2% as earnings topped forecasts. Monster Beverage Corp. climbed 5.8% after the maker of energy drinks posted second-quarter earnings that exceeded analysts' estimates. Trading in S&P 500 stocks was 14% below the 30-day average at this time of day.
The US carried out airstrikes against militants from Islamic State in Iraq, the Pentagon said. The escalation in US involvement in the country comes as the Islamic State, the extremist group that's conquered swaths of northern Iraq since June, extended its advance. Israeli aircraft pounded the Gaza Strip on Friday after militants fired rockets into the country's south, shattering a ceasefire.
The Kremlin's offer of a mediating role comes after the failure of previous diplomatic efforts involving Russia, Ukraine, Europe and the US. Russia has consistently insisted on including the pro-Moscow rebels in the talks, a demand that has blocked any progress in the past.
The US 10-year yield fell three basis points to 2.39% and touched 2.35%, the lowest since June 2013. Germany's 10-year bonds advanced, leaving the rate lower for a fifth week, the longest run since June 2012. Borrowing costs also fell to record lows from France to Finland amid a surge in the euro area's higher-rated government bonds. The yen strengthened 0.2% to 101.89 versus the dollar.
The Stoxx 600 fell to the lowest level since March, capping a 2.1% slide this week after sinking 2.9% in the prior period. Germany's DAX Index dropped as much as 11% on Friday from its 3 July record, while France's CAC 40 Index lost as much as 10% since its six-year high in June.
The Euro Stoxx 50 has dropped 2.1% this week, closing at its lowest level since 14 March on Thursday, after European Central Bank (ECB) president Mario Draghi said that geopolitical risks in countries such as Ukraine could hurt the economic recovery.
'The correction is a wake-up a call,' Ros Price, who helps oversee about 6 billion pounds ($10 billion) as chief investment strategist at Seven Investment Management Ltd. in London, said in a phone interview. 'Yes, it is true that markets have weathered lots of risks, but people are rightly becoming worried now. We're being assaulted on all sides. You have to wonder whether the recovery since 2009 has peaked. I think there's a good chance that maybe it has.'
The MSCI Emerging Markets Index retreated 0.6% on Friday, poised for a second weekly decline. Benchmark gauges in Poland, India, South Korea, Malaysia and the Philippines lost at least 1% on Friday.
Russia's Micex jumped 1.8%, rebounding from a three-month low to halt a three-day decline, as energy stocks advanced with Brent crude prices.
Brent rose to $104.78 a barrel and West Texas Intermediate oil was little changed at $97.35 a barrel. Conflict in the member of the Organization of Petroleum Exporting Countries (Opec) has so far spared production in Iraq's south, home to about three-quarters of its crude output.
Industrial metals from zinc to lead fell in London amid concern unrest in the Middle East and Ukraine threatens to curb economic growth and demand. Bloomberg
Emma O'Brien in Wellington, Yoshiaki Nohara in Tokyo, Ben Sharples in Melbourne, Claudia Carpenter, Cecile Vannucci, Stephen Kirkland and Sofia Horta e Costa in London, Wes Goodman in Singapore, Nick Gentle in Hong Kong and Henry Meyer in Moscow also contributed to this story.
Post a Comment for "US stocks rise, bonds pare gains on easing tension in Ukraine"