Futures on the Euro Stoxx 50 Index jumped 2.5 percent as of 7:24 a.m. in London while the MSCI Asia Pacific excluding Japan Index climbed 2 percent, heading for its highest close since August 2011. Copper in London gained 2.2 percent as oil in New York rose 1.1 percent. The yen tumbled 1.2 percent to 115.84 per euro, the biggest drop in a week, and the Dollar Index, which tracks six peers, fell 0.4 percent.
The House of Representatives voted in favor of the Senate’s budget legislation as Republican lawmakers abandoned efforts to add spending cuts to the bill, removing one impediment to recovery in the world’s largest economy. Data due today in Europe include euro-region manufacturing figures that were expected to show the pace of contraction little changed, and initial inflation figures for German states.
“It’s an immediate positive and a short-term relief that they got the deal through,” Binay Chandgothia, a Hong Kong based portfolio manager at Principal Global Investors, which oversees more than $250 billion in assets worldwide, said in a phone interview. “The sustainability will depend on what comes out ultimately and how things shape up with the debt ceiling debate. There will now be protracted political negotiations.”
The 257-167 bipartisan vote breaks a year long impasse over how to head off $600 billion in tax increases and spending cuts set to start taking effect yesterday. President Barack Obama said he will sign the bill.
Asian Indexes
About five stocks climbed for each that fell on the MSCI Asia Pacific excluding Japan Index as all 10 industry groups rose during the year’s first trading session. Basic-material producers and technology companies led the advance. Equity markets in Japan and mainland China are closed today and tomorrow for public holidays.
Australia’s S&P/ASX 200 Index gained 1.2 percent and South Korea’s Kospi Index added 1.7 percent. Hong Kong’s Hang Seng Index advanced 2.5 percent while a gauge of Chinese companies listed in the city surged 3.7 percent. Singapore’s Straits Times Index added 1.3 percent after the economy expanded more than economists estimated last quarter.
Developing-nation stocks rose the most since September, with the MSCI Emerging Markets Index adding 1.5 percent and the MSCI BRIC Index of the largest emerging markets 1.4 percent higher, up 20 percent from last year’s low and poised to close in a bull market.
Relative Value
The MSCI Asia Pacific Index, which includes companies from Japan, increased 14 percent last year. The Asia-Pacific gauge trades for 15 times estimated earnings compared with the Standard & Poor’s 500 Index, which trades for 13.8 times and the Stoxx Europe 600 Index, valued at 12.7 times.
The U.S. measure isn’t the grand bargain on deficit reduction lawmakers wanted when they created the tax-and- spending deadlines over the past three years. While avoiding most of the immediate pain, it is only one step toward curbing the federal deficit -- an issue that will return with a February fight over raising the $16.4 trillion debt limit.
“The deficit needs to be reduced in a way that’s balanced,” Obama said at the White House. He said he wants top earners and corporations to pay even more and that Congress must raise the debt ceiling. “Everyone pays their fair share. Everyone does their part,” he said.
Commodities Rally
U.S. stocks surged on the last day of a year by the most since 1974 on Dec. 31, completing a 13 percent increase for 2012, the best since 2009. Gold extended a 12th annual gain, the longest streak since at least 1920.
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