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US: Stocks jump as commodities rebound; Brazil assets advance

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[NEW YORK] US stocks rallied the most in two months, joining a surge in global equities as the bearish sentiment that has set the tone in markets the past two weeks eased amid a rebound in commodities from crude to silver. The yen declined a second day and Brazil's real advanced.

The Dow Jones Industrial Average jumped 222 points, European shares climbed to a three-week high and emerging-market equities halted a seven-day slide. Nickel led a rebound in a Bloomberg measure of raw-materials prices, while crude jumped from a two-week low in New York.

Brazilian markets rebounded as the move to oust President Dilma Rousseff appeared back on track.

The recovery in stocks follows a selloff last week that wiped out about US$1.5 trillion as economic data pointed to lackluster growth in the world's biggest economies and called into question the effectiveness of central-bank stimulus.

The S&P 500 began a rebound on Friday as worse-than-estimated jobs data spurred speculation the Federal Reserve will adopt a slower pace in tightening monetary policy. The yen weakened as the nation's finance minister signaled the government has the means to intervene if necessary.

"Some of the same factors driving commodities are driving global growth and equities in general," said Greg Woodard, a senior analyst and strategist at Fairport, New York-based Manning & Napier Inc, which oversees about US$46 billion.

"If they feel better about growth in China, in emerging markets and global growth, they feel more positive about equities and commodities. The commodity space is really a barometer as opposed to driving equities."

The S&P 500 rose 1.3 per cent at 4 pm in New York, for its biggest gain since March 11. The index hadn't posted a move of more than 1 per cent in either direction for 18 straight sessions, the longest stretch of calm since 2014.

After rallying 15 per cent from a February low, the index has struggled since to press higher amid lacklustre corporate results, particularly from technology giants such as Apple Inc and Microsoft Corp, as well as subdued economic indicators that damped investor appetite for risky assets. It's now up 14 per cent from that February trough.

On Tuesday, energy and materials producers led advances, with gains of at least 1.7 per cent. Amazon.com Inc added 3.5 per cent to an all-time high after an analyst boosted its price target on the shares to US$1,000. Exxon Mobil Corp and Schlumberger Ltd rose at least 1.6 per cent. Gap Inc fell 12 per cent after quarterly results disappointed.

The Stoxx Europe 600 Index advanced 0.9 per cent, with most of its industry groups rising. Lenders led gains. Greece's ASE Index rose 2.7 per cent for the biggest rally among western-European markets. S&P 500 futures added 0.4 per cent after the gauge closed little changed on Monday.

The MSCI Emerging Markets Index gained 0.7 per cent, after falling for seven days in the longest slump this year. Brazil's Ibovespa jumped 1.7 per cent to rebound after the benchmark slumped 1.4 per cent on Monday. The process to oust Ms Rousseff appeared back on track after the head of the lower house reversed his own call to annul impeachment sessions in the lower house.

The yen slid 0.9 per cent to 109.30 per dollar, adding to Monday's loss of 1.1 per cent. It declined versus all of its 16 major counterparts. The real advanced 0.6 per cent to 3.4938 per dollar.

The Bloomberg Dollar Spot Index was little changed, after rising for five days.

The real posted the biggest gain in emerging markets and the equity gauge was the world's best performer in dollar terms. It added 1.2 per cent to 3.4752 per dollar.

Oil rose from a two-week low on concern that supplies from Nigeria and Libya, holders of Africa's largest crude reserves, will be disrupted. West Texas Intermediate crude gained 2.8 per cent to US$44.66 a barrel. It slid 2.8 per cent on Monday as Canadian oil-sands producers began restarting operations after wildfires forced shutdowns.

Prices are still below US$45 a barrel on speculation US stockpiles have continued to rise.

Zinc and nickel rose, a day after industrial metals posted the biggest selloff in two months, as data showing firming inflation eased demand concerns in China, the world's biggest user. Zinc for delivery in three months gained 0.9 per cent to US$1,851.50 a metric ton.

Nickel gained 1.3 per cent, after retreating 5.1 per cent on Monday.

The biggest rally for soybean futures in more than five years is underpinning a rebound across agriculture as the US government forecasts an ebbing global glut for the oilseed.

Treasuries fluctuated, paring earlier losses, after the US sold three-year notes at a lower-than-forecast yield, another sign that investors expect the Federal Reserve to take a gradual approach to raising interest rates.

Treasury 10-year note yields were little changed at 1.76 per cent, while three-year yields rose less than one basis point to 0.86 per cent.

Greece's government bonds and stocks rallied amid optimism that euro-area finance chiefs just took a major step forward in their quest to unlock aid for the nation.

Goldman Sachs Group Inc sees Japan as a potential source for the next international selloff in bonds. Japanese government securities have driven a worldwide rally in 2016, much as euro-area bonds did last year, and Goldman Sachs says the Asian nation's debt now looks overvalued.

BLOOMBERG