Global Stocks Gain on Ukraine as Gold Drops; Rupiah Falls

London (July 22)  Stocks rallied around the world while gold and Treasuries declined as the stand-off over a downed passenger jet in Ukraine eased. Emerging-market stocks climbed to a 17-month high and Indonesia’s rupiah weakened as a presidential candidate rejected election results.

The MSCI All-Country World Index rose 0.3 percent by 7:38 a.m. in New York with Standard & Poor’s 500 Index futures (SPX) up 0.3 percent. The euro weakened to a five-month low against the dollar and Treasury yields rose two basis points. The MSCI Emerging Markets Index advanced 0.9 percent with Shanghai to Moscow shares gaining. Gold fell 0.4 percent. The rupiah weakened 0.3 percent. Saudi Arabian equities added 2.5 percent after the kingdom said it will open up the stock market to international investors.

Rebels in Ukraine’s east began releasing the bodies of the 298 people killed in the shooting down of a Malaysia Airlines passenger jet last week as European foreign ministers meet to discuss sanctions against Russia today. U.S. reports today are forecast to show slowing inflation and an improvement in existing home sales. Apple Inc. (AAPL), Microsoft Corp. and McDonald’s Corp. report earnings.

“The most market-friendly outcome from the EU ministers’ meeting is that they talk tough but don’t intensify sanctions against Russia,” Christian Stocker, a strategist at UniCredit Bank AG in Munich, said in a phone interview. “I’m not sure stocks can hold these levels.”

Home Sales

Sales of U.S. existing home sales probably rose to a 4.99 million annual pace in June from 4.89 million in May, according to economist forecasts in a Bloomberg News survey. U.S. consumer prices advanced 0.3 percent in June after a 0.4 percent jump the month before, the economist forecasts show.

The Stoxx 600 rallied 0.9 percent after a three-day decline of 1.5 percent. Miners and oil and gas companies gained the most among 19 industry groups in the gauge today, while the volume of shares listed on the Stoxx 600 changing hands was 24 percent lower than the 30-day average, data compiled by Bloomberg show.

Actelion Ltd. climbed 3.5 percent after the Swiss drugmaker raised its full-year profit forecast. ARM Holdings Plc rose 6.5 percent after the chip designer whose products power Apple Inc.’s iPhone and iPad forecast an acceleration of royalty revenue growth in the second half of the year.

Publicis Groupe SA retreated 5.2 percent after the French advertising company said second-quarter sales fell, missing projections.

Near Record

Futures on the S&P 500 expiring in September climbed after the index slid 0.2 percent yesterday, closing 0.6 percent away from a record reached this month.

Verizon Communications Inc. is also reporting earnings today. About 77 percent of those that have posted results this earnings season have beaten analysts’ estimates for profit, while 71 percent exceeded sales projections, according to data compiled by Bloomberg.

Profits at S&P 500 members probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.

The MSCI AC Asia Pacific Index (MXAP) gained 0.6 percent today, climbing to its highest level since June 2008.

Russian Shares

Russian shares rose for the first time in seven days, with the Micex Index (INDEXCF) climbing 1.9 percent. The 14-day relative strength index on the equity gauge fell to 28, below the level of 30 that signals an asset is set to reverse direction, according to some technical analysts. The ruble strengthened 1 percent against the dollar.

Since President Vladimir Putin began his push into Crimea in late February, the Micex lost 4.2 percent through yesterday and wiped out about $28 billion in market value, even as stock gauges from the U.S. to India jumped to all-time highs.

The cost of insuring against losses on Russian sovereign debt fell, with credit-default swaps decreasing 4.5 basis points to 215.5 basis points, according CMA. That compares with 166.5 basis points on July 9.

A total of 9,726 credit-default swaps contracts covering a record $9.8 billion of Russian sovereign debt were outstanding as of July 11, according to the Depository Trust & Clearing Corp. That’s up from about $5.5 billion at the start of the year.

Corporate Debt

The cost of insuring against losses on European corporate debt fell, with the Markit iTraxx Europe index of credit-default swaps on 125 investment-grade companies decreasing two basis points to 61 basis points.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong climbed 2.4 percent, the most since March, on stimulus speculation. The Shanghai Composite Index jumped 1 percent.

Mainland developers gained after the National Business Daily said Wenzhou became the latest city to remove home-purchase restrictions. The article on easing property restrictions follows a report from the China Business News yesterday that the government granted a 1 trillion yuan ($161 billion) loan to China Development Bank to help fund subsidized housing.

Saudi Arabia

The Tadawul All Share Index (SASEIDX) jumped as Saudi Arabia said it will open up its stock market in the first half of 2015, giving foreigners greater access to the Arab world’s biggest bourse. Saudi’s Capital Market Authority will publish rules next month for participation by qualified foreign financial institutions in the stock market, it said in a statement on its website today.

Indonesian stocks retreated, with Jakarta Composite Index (JCI) falling 0.9 percent, and the rupiah erased earlier gains after presidential candidate Prabowo Subianto rejected the election on July 9. Prabowo said in a televised speech today the vote wasn’t democratic and that he was withdrawing his witnesses from a meeting with the General Election Commission.

The euro dropped as much as 0.3 percent to $1.3478, the weakest level since Feb. 3. Australia’s dollar strengthened 0.2 percent to 93.89 U.S. cents.

The yield on 10-year Treasury notes rose to 2.49 percent. The rate on similar-maturity Spanish debt fell one basis point to 2.55 percent.

Gold retreated to $1,307.36 an ounce while zinc rallied as much as 1.5 percent to the highest since August 2011. Aluminum climbed 0.8 percent after entering a bull market yesterday.

Brent gained 0.5 percent to $108.26 a barrel. U.K. natural gas fell 0.8 percent, the third consecutive decline, according to broker data on Bloomberg.

Source: Bloomberg