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  1. Stock rally extends into Asia as traders await RBI, Aussie GDP

Stock rally extends into Asia as traders await RBI, Aussie GDP

Analysts forecast the RBI will cut its key interest rate on Wednesday, while the European Central Bank is expected Thursday to extend its bond-buying program beyond the current March end date.

By: | Published: December 7, 2016 5:44 AM
Stock futures signalled a rally in U.S. equities will extend into Asian markets as traders await India’s central bank policy meeting. (AP) Stock futures signalled a rally in U.S. equities will extend into Asian markets as traders await India’s central bank policy meeting. (AP)

Stock futures signalled a rally in U.S. equities will extend into Asian markets as traders await India’s central bank policy meeting, while the Australian dollar held losses before data expected to show the world’s 12th-largest economy shrank.

Australia’s benchmark index jumped 0.6 percent, as equity-index contracts in Japan, Hong Kong and South Korea climbed at least 0.1 percent. Analysts forecast the Reserve Bank of India will cut its key interest rate on Wednesday, while the European Central Bank is expected Thursday to extend its bond-buying program beyond the current March end date. Australian gross domestic product probably declined 0.1 percent last quarter, its first contraction since the start of 2011.

More than $1.5 trillion has been added to the value of global equities in the past month amid speculation U.S. President-elect Donald Trump will stoke inflation, driving the Dow Jones Industrial Average to a record and sending bond yields surging as money poured out of fixed-income assets. Investors are also betting European monetary policy will remain accommodative.

“This stabilization story in Europe and further stimulus from the ECB will be bullish for equities,” said James Woods, Sydney-based analyst at Rivkin Securities, a brokerage. “The minimum we’re expecting is for the ECB to announce a six-month extension.”

Stocks

The S&P 500 rose 0.3 percent to 2,212.23, while the Dow Average gained 0.2 percent. Verizon Communications Inc. led a 1.2 percent advance in phone stocks, while Goldman Sachs Group Inc. added 1.2 percent in a second day of gains. Australian real estate and financial companies led the surge in the S&P/ASX 200 Index as of 8:17 a.m. Tokyo time; New Zealand’s S&P/NZX 50 Index slipped 0.2 percent. The Stoxx Europe 600 Index rose 1 percent, building on its 0.6 percent advance from Monday. Italy’s FTSE MIB Index jumped 4.2 percent, helped by gains in UniCredit SpA and Mediobanca SpA. The MSCI Emerging Markets Index increased 0.9 percent. Futures contracts on Japan’s Nikkei 225 Stock Average climbed 0.3 percent in Chicago.

Commodities

West Texas Intermediate crude rose 0.3 percent to $51.05 a barrel, after slipping 1.7 percent the previous session when Brent oil dropped 1.9 percent to $53.92. Aluminum fell 1.5 percent in London on Tuesday to $1,709 a metric ton. The metal will probably tumble next month as an “irrational” increase in prices prompts companies to restart plants, while new capacity also ramps up in the world’s largest supplier, according to China’s top metals industry group. Copper lost 1 percent. Gold climbed 0.7 percent.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, added 0.2 percent on Tuesday after falling 0.4 percent on Monday. The euro held losses at $1.0720 after retracing some of Monday’s 0.9 percent surge in the wake of the Italian vote. The Australian dollar was little changed at 74.65 U.S. cents ahead of the GDP release at 11:30 a.m. in Sydney. The Reserve Bank of Australia on Tuesday kept interest rates unchanged and Governor Philip Lowe said “some slowing in the year-ended growth rate is likely.”

Bonds

Italy’s 10-year bond yields declined by four basis points to 1.94 percent, after Monday’s increase of eight basis points. Almost all economists surveyed by Bloomberg expect the ECB to announce on Thursday that its bond-buying program will be extended after March, and most foresee an extension of about six months at the current 80 billion euros ($86 billion) a month. Ten-year Treasury yields edged down by one basis point to 2.39 percent.

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