Metals, Aussie Rise on China Stimulus as Stocks Swing; Oil Gains

Industrial metals rallied with commodity- producers’ currencies, while Chinese money-market rates fell to a two-year low after the central bank cut the amount of reserves banks need by the most since the global financial crisis. Oil climbed with U.S. index futures. Copper and zinc futures rose at least 0.7 percent by 12:03 p.m. in Tokyo, as the currencies of Australia, New Zealand and Canada strengthened at least 0.3 percent versus the dollar. Chinese interest-rate swaps slid to the lowest level since 2012, while the Shanghai Composite Index fluctuated after advancing more than 6 percent last week. Standard & Poor’s 500 Index futures gained 0.4 percent. Oil rose for the seventh time in eight days. China’s 100 basis point cut to the main reserve ratio, the most since 2008, came amid the slowest expansion in six years and as data Saturday showed new-home prices falling from a year earlier in all 70 cities monitored. The country’s stock regulator on Friday tightened rules for margin-trade financing and made it easier to bet on declines. Solid U.S. inflation data also fueled global stock losses on Friday. “The bull market is unlikely to end abruptly amid monetary easing, and will spill over to Hong Kong.” Hao Hong, the chief China strategist at Bocom International Holdings Co. in Hong Kong, wrote in a note Monday. “A market consolidation is nigh, and it will be extremely volatile. We should all know now by heart that the government is unequivocally supportive of a bull market, and is underwriting the rally.” $193 Billion The reserve ratio cut, and additional easing for some rural institutions, could free up as much as 1.2 trillion yuan ($193 billion) in total, according to Goldman Sachs Group Inc. analysts. The China Securities Regulatory Commission expanded the number companies available for short selling and banned brokerages from using so-called umbrella trusts in their margin lending businesses. The Securities Association of China announced Friday mutual-fund managers can lend stocks for short selling. Offshore Chinese equity-index futures fell as much as 6.3 percent in the wake of the announcements, before almost erasing those declines after the reserve ratio cut. The Hang Seng Index was little changed Monday and the Hang Seng China Enterprises Index, which closed at its highest level since January 2008 on Thursday, added 0.5 percent. The Shanghai Composite Index swung between a drop of 1.1 percent and a gain of 1.5 percent. The cost of one-year interest-rate swaps, the fixed payment to receive China’s floating seven-day repurchase rate, declined 20 basis points, or 0.2 percentage point, to 2.78 percent, according to data compiled by Bloomberg. That’s the lowest level since August 2012. Copper Rallies The Bloomberg Commodities Index advanced 0.5 percent as China’s stimulus was seen boosting demand in the world’s biggest consumer of industrial metals. Lead and zinc both climbed to the highest this year on the London Metal Exchange, while copper extended gains to a three-week high. Copper for delivery in three months on the LME rose 1.1 percent to $6,125 a metric ton, while lead and zinc traded at $2,050 a ton and $2,229 a ton respectively. The LMEX Index of the six main base metals on the exchange slipped to a five-year low on March 18 on concern that slowing economic growth in China will weaken demand amid ample supplies. West Texas Intermediate crude climbed 1.5 percent to $56.85 a barrel in New York, close to the highest settlement for this year. Brent, the benchmark contract for more than half of global oil, added 1.3 percent to $64.30 a barrel in London, near the $64.95 level struck on April 16 that was the highest since Dec. 11.