Stocks, Dollar Rise on Earnings as Gold Retreats

Equities edged higher in Asia and Europe as positive earnings news from some of the world’s biggest companies countered concern the global economy is losing steam. The dollar strengthened while gold retreated.

The MSCI All Country World Index held near an eight-month high as a gauge of Hong Kong shares was poised to enter a bull market. The yuan had its biggest intra-day jump in a month, even as rising odds of a U.S. interest-rate lifted the Bloomberg Dollar Spot Index to its highest since May. The lira advanced, after earlier sinking to within 0.5 percent of it weakest level on record, before Turkey’s president makes an announcement in the wake of a failed coup. Oil extended losses below $45 a barrel as gold dropped to this month’s low.

A three-week run that’s boosted the combined worth of global shares by more than $4.5 trillion has pushed valuations to the highest level in 11 months. Investors are assessing corporate earnings amid concern sluggish global growth will persist after the International Monetary Fund scrapped its forecast for a pickup in the pace of expansion this year. Goldman Sachs Group Inc. and Microsoft Corp. on Tuesday announced quarterly profits that surpassed analysts’ estimates, something achieved by 77 percent of the S&P 500 members to have reported so far.

“The rally is losing some momentum as the reporting season heats up,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “We’re staying cautious and taking a little bit of profit off the table. With the equity rebound stalling, we are really looking for positive momentum from the reporting season” for the next leg up in stocks, he said.

Morgan Stanley, Intel Corp. and American Express Co. are among U.S. companies announcing results on Wednesday. Gauges of euro-area consumer confidence and U.K. unemployment are also due, and Brazil’s central bank is expected to leave its benchmark interest rate unchanged at a monetary policy review.

Stocks

The Stoxx Europe 600 Index was up 0.3 percent as of 8:27 a.m. London time, after falling 0.4 percent in the last session. SAP SE rose 2.8 percent after the software maker reported a profit that topped analysts’ estimates. Nordea Bank AB gained 1 percent after Scandinavia’s biggest bank unveiled its results.

The MSCI Asia Pacific Index gained 0.1 percent, after earlier falling as much as 0.4 percent. The MSCI Hong Kong Index rose 0.8 percent and has now rebounded more than 20 percent from a three-year low recorded in January.

Shares of raw-materials producers declined. Anglo American Plc sank 3.1 percent after the company cut its full-year copper-production target to reflect the impact of severe winter weather on its operations in Chile. BHP Billiton Ltd. dropped 2.9 percent in Sydney after the world’s biggest mining company said iron-ore production fell 7 percent from a year earlier during the last quarter.

Futures on the S&P 500 Index were little changed after the U.S. gauge slipped from an all-time high in the last session. The Dow Jones Industrial Average advanced for an eighth day, its longest rally in three years, and Microsoft rallied in after-hours trading following the release of its results.

Currencies

The lira was 0.2 percent stronger at 3.0355 per dollar, after earlier sinking as much as 0.7 percent. The currency has tumbled about 5 percent since a failed coup attempt on Friday as authorities purged state institutions, the central bank lowered interest rates and Moody’s Investors Service said it may lower the country’s credit rating to junk. President Recep Tayyip Erdogan is due to make an announcement on Wednesday that an official said would boost social cohesion and Turkey’s democratic credentials.

The Bloomberg Dollar Spot Index added 0.1 percent, after advancing 0.5 percent to a six-week high in the last session as a report showed new-home construction in the U.S. rose more than economists forecast in June. A Citigroup gauge that tracks the degree to which American data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve rate increase this year at 43 percent, up from 9 percent at the start of this month.

“The market will recalibrate on Fed rate-hike expectations to price in at least one” this year, said Charlie Lay, a foreign-exchange strategist in Singapore at Commerzbank AG. “That should support the dollar.”

South Korea’s won weakened 0.4 percent versus the dollar, the biggest loss among 16 major currencies. South Africa’s rand was the only gainer in the group, rising 0.3 percent.

The yuan jumped as much as 0.28 percent to 6.6780 per dollar amid speculation China’s central bank is trying to prevent the currency from weakening beyond 6.70, a threshold that was breached this week for the first time since 2010. The People’s Bank of China raised its daily reference rate for its currency on Wednesday, even after the greenback strengthened overnight.

Commodities

Crude oil fell 0.3 percent to $44.52 a barrel in New York, after sliding 2.8 percent over the last two trading days. While government data Wednesday is forecast to show supplies fell for a ninth week, stockpiles will still be more than 100 million barrels above the five-year seasonal average.

Nickel dropped as much as 1.7 percent in London, retreating from its highest close since October. Copper lost 0.7 percent as China released data showing it boosted output by 7.6 percent in the first half and Barclays Plc forecast there will be a worldwide surplus of the metal every year until 2020.

Bonds

U.S. Treasuries due in a decade were little changed, yielding 1.55 percent. Similar-maturity sovereign debt in Japan yielded minus 0.24 percent, down one basis point from the last session.

(Source: Bloomberg)