Monday, June 1, 2009

European, Asian Stocks, U.S. Futures Rocking

. Monday, June 1, 2009

By stockOzone team

Stocks in Europe and Asia and U.S. futures rose, pushing the MSCI World Index to the highest level in almost seven months, as speculation grew that the worst of the global recession is over.

BHP Billiton Ltd., the world’s largest mining company, climbed 4.5 percent as Chinese manufacturing expanded for a third month and copper, silver and gold rallied. Cnooc Ltd., China’s biggest offshore oil producer, jumped 8.8 percent as oil surged to a seven-month high.

The MSCI World added 1.3 percent at 9:45 a.m. in London, the highest level since Nov. 5. The gauge of 23 developed countries last week capped its first three-month rally since May 2007 and has gained 42 percent since March 9 on optimism that the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.

“We are getting closer to the bottom” for the economy, said Andy Lynch, who helps manage about $5 billion at Schroder Investment Management Ltd. in London. “The data is not as awful as it was. We can continue to see this positive strength in equities.”

Europe’s Dow Jones Stoxx 600 Index climbed for the fifth time in six days, adding 2.1 percent. The MSCI Asia Pacific Index rallied 2.9 percent.

GM, Coppock Guide
Standard & Poor’s 500 Index futures expiring this month climbed 1.6 percent. U.S. manufacturing probably shrank in May at the slowest pace in eight months, economists said before the Institute for Supply Management’s factory index data due at 10 a.m. New York time. Futures increased even as General Motors Corp., the world’s largest automaker for 77 years, was poised to file for bankruptcy today.

U.S. stocks are worth buying for the first time in six years, according to the so-called Coppock guide or Coppock curve, an indicator that has signaled bull markets all but once since World War II.

Still, shares in the U.S. are expensive relative to those in Europe having “significantly and steadily” outperformed over the past two years, UBS AG strategists led by Jeffrey Palma wrote in a report dated May 29. The bank raised its recommendation on European stocks to “overweight” and downgraded U.S. equities to “underweight.”

Manufacturing in China
Manufacturing in China expanded for a third month, with the official Purchasing Manager’s Index at a seasonally adjusted 53.1 in May after registering 53.5 in April, the Federation of Logistics and Purchasing said. A reading above 50 indicates an expansion.

China, the world’s second-biggest energy consumer, also increased prices of gasoline and diesel by as much as 8 percent today, a move that may prompt domestic refiners to boost crude purchases for processing.

BHP Billiton added 4.5 percent to 1,543 pence. Rio Tinto Group, the third-biggest mining company, gained 6.4 percent to 2,980 pence. Copper advanced as much as 3.8 percent on the London Metal Exchange.

Cnooc Ltd., China’s biggest offshore energy explorer, surged 8.8 percent to HK$11.10. Shell climbed 1.3 percent to 1,682 pence, while Mitsubishi rose 5.6 percent to 1,899 yen. Crude oil for July delivery increased 2.6 percent to $68.01 a barrel in New York.

A measure of European automakers advanced 4.6 percent, the steepest gain among all 19 industry groups on the Stoxx 600 except basic-resources companies. Peugeot SA rose 6.1 percent to 22.75 euros and Daimler AG soared 6.6 percent to 27.55 euros, the most in almost two months.

GM will file for bankruptcy today, emerging with majority ownership by taxpayers and liabilities reduced by more than 50 percent, according to the U.S. government. The “new GM” will get $30.1 billion in bankruptcy financing from the government, and the Treasury “does not anticipate providing any additional assistance” after that, the Obama administration said yesterday in a statement.

Disclosure: Author does not own any of the stocks discussed here.

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