Stocks Climb on Earnings While Euro Gains, Aussie Weakens

By Stephen Kirkland & Jae Hur

Stocks climbed as earnings at companies from Societe Generale SA to DirecTV and Allianz SEbeat estimates while the euro rallied after German factory orders unexpectedly increased.Australia’s dollar weakened as the central bank cut interest rates.

The Standard & Poor’s 500 Index rose 0.2 percent to 1,620.05, reaching a record for a fourth straight day, and the Stoxx Europe 600 Index added 0.4 percent to reach an almost five-year high. Corporate bond risk in Europe retreated to the lowest in three years. The euro gained 0.4 percent to $1.3124 while the Australian dollar dropped against all 16 major peers. Portugal’s 10-year bonds were little changed before the first sale of similar-maturity notes since the country sought a European Union bailout two years ago. Oil slipped 0.4 percent. Societe Generale, France’s second-largest bank, reported earnings dropped less than analysts estimated, while Allianz, Europe’s biggest insurer, said first-quarter profit climbed 24 percent. The Reserve Bank of Australia lowered its main rateby a quarter percentage point to 2.75 percent, a day after European Central Bank President Mario Draghi said further cuts in rates are possible following a reduction to an all-time low last week.

“Investors like to be reassured from central banks that we are on the straight and narrow,” said James Lindsay, an Auckland-based fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion. “Until economies really start to fire, I can’t see any pull-back of stimulus.”

Market Movers

The S&P 500 (SPX) gained 0.2 percent yesterday, extending a record. Twenty-three companies in the gauge are due to report results today, including Walt Disney Co. Of the index members to have posted earnings so far this season, 72 percent topped analysts’ profit projections while 53 percent missed on sales, according to data compiled by Bloomberg.

The Stoxx 600 advanced for the fourth time in five days, heading for the highest close since June 2008. SocGen (GLE) rallied 8 percent to an eight-week high and Allianz rose 2.8 percent to the highest level in almost five years.

HSBC Holdings Plc, Europe’s largest bank, jumped 2.7 percent after saying first-quarter profit almost doubled.

The cost of insuring European corporate bonds declined to the lowest level since May 2010, according to data compiled by Bloomberg. The Markit iTraxx Europe Index of 125 investment- grade companies fell 3.3 basis points to 89 basis points.

Alstom SA sank 10 percent, the most since 2008, after the world’s third-biggest power-equipment maker cut its profitability forecasts as full-year earnings missed estimates.

Emerging Markets

The MSCI Emerging Markets Index gained for a third day, adding 0.4 percent. The Hang Seng China Enterprises Index of mainland companies rose 1 percent and the Shanghai Composite Index (SHCOMP) added 0.2 percent. Malaysia’s benchmark gauge climbed 1.4 percent, capping its biggest two-day rally in four years, after Prime Minister Najib Razak’s election victory.

The yuan strengthened 0.2 percent against the dollar as Premier Li Keqiang pledged to come up with a plan this year to let investment capital move more freely in and out of China.

The euro advanced against all but two of its 16 most-traded counterparts. German factory orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, when they also advanced 2.2 percent, the Economy Ministry said. Economists forecast a 0.5 percent drop, according to the median of 39 estimates in a Bloomberg News survey.

The Australian dollar fell as low as $1.0155, the least since March 4, before trading 0.8 percent lower at $1.0171. The yen advanced against most of its peers, rising 0.1 percent to 99.19 per dollar.

Portugal is selling euro-denominated debt due February 2024, according to a person familiar with the transaction, who asked not to be identified because they’re not authorized to speak about the deal.

Austria Sale

Austria sold 660 million euros ($863 million) of 10-year bonds at a record-low yield of 1.621 percent and the same amount of securities due in 2019 at 0.794 percent. Germany’s 10-year bond yields rose four basis points to 1.28 percent and the rate on gilts climbed seven basis points to 1.79 percent.

Volatility on U.K. bonds was the highest among developed markets tracked by Bloomberg followed by those of Sweden and Germany, according to measures of 10-year debt, the yield spread between two- and 10-year securities and credit default swaps.

West Texas Intermediate crude declined for the first time in four days, slipping 0.4 percent to $95.77 a barrel. Trading on the London Metal Exchange resumed after a public holiday yesterday. Rubber rallied 6.8 percent in Tokyo, the most since November 2011, after trading was closed for the past two days. Wheat climbed 0.5 percent after the U.S. government said winter- crop conditions worsened.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jae Hur in Tokyo at jhur1@bloomberg.net;

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