World stocks buoyed by US earnings

LONDON — World stocks mostly rose Thursday after figures showed Chinese economic growth holding up slightly better than expected and the US corporate earnings results season continues to largely beat forecasts.

By (AP)

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Published: Thu 21 Oct 2010, 6:38 PM

Last updated: Mon 6 Apr 2015, 2:07 AM

In Europe, the FTSE 100 index of leading British shares was up 44.64 points, or 0.8 percent, at 5,773.57 while Germany’s DAX rose 64.88 points, or 1 percent, at 6,589.43. The CAC-40 in France was 37.93 points, or 1 percent, higher at 3,866.08.

Wall Street was also poised for further gains following Wednesday’s big gains — Dow futures were up 67 points, or 0.6 percent, at 11,132 while the broader Standard & Poor’s 500 futures rose 6.6 points, or 0.6 percent, at 1,181.30.

Stocks are rallying on the back of more forecast-busting US earnings from the likes of eBay and insurer Travellers. There will be interest later at Caterpillar as investors look to get an insight into the state of the construction sector. After the close, highlights include Amazon and American Express.

“There’s no shortage of other reports due either and any big surprises could start to shift sentiment,” said Chris Weston, research analyst at IG Markets.

The main point of interest earlier was the news that China’s rapid growth slowed to a still robust 9.6 percent in the third quarter from the year before. Though that was down from 10.3 percent in the previous quarter, it was modestly higher than expectations. There was also relief that inflationary pressures remained fairly benign.

Neil MacKinnon, global macro strategist at VTB Capital, said the data were “consistent with a ‘soft landing’ scenario for China.”

China will also be at the center of this weekend’s meeting of finance ministers from the Group of 20 leading industrialized and developing countries in South Korea to see if currency tensions are addressed.

In particular, investors will be looking to see if the US and China can come to some sort of arrangement, whereby the Chinese allow their currency, the yuan, to appreciate at a more rapid pace against the dollar.

Simon Derrick, senior currency strategist at Bank of New York Mellon, said the stakes are high at the G-20.

“It seems to us that signs of an accord should prove dollar bullish as it would, presumably, see both the US reaffirm its commitment to not devaluing its way out of trouble while China and others commit to actions that would see them accumulating less reserves and, hence, have less need to diversify them into currencies such as the euro,” said Derrick.

“If no sign of an accord emerges, however, then this would likely see the euro vaulting higher and a very uncomfortable end to the year,” he added.

Ahead of the meeting, the euro was up 0.4 percent on the day at $1.4017 while the dollar was 0.1 percent lower at 81.06 yen.

That means that the dollar’s advance in the wake of China’s surprise rate hike earlier this week has dissipated.

The dollar has been pressured of late by mounting expectations that the Federal Reserve will decide to pump more money into the US economy. An official announcement that the Fed is ready to buy more financial assets — so-called quantitative easing — in an attempt to drive down rates on mortgages, corporate loans and other debt in the ultimate hope of boosting economic activity and supporting prices, is expected to be announced on Nov. 3 after the conclusion of the next policy meeting.

Analysts said the scale of the Fed’s buying will depend on how the economic figures are in the run-up to the rate-setting meeting.

“The path of the data remains central to the Fed debate, and the numbers between now and November 3 can still have a bearing on the outcome, even if the impact now looks likely to be confined to the size of the package,” said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole.

Earlier in Asia, Japan’s benchmark Nikkei 225 stock index closed down 0.1 percent, or 5.12 points, to 9,376.48 amid ongoing yen strength, while Australia’s S&P/ASX 200 ended the day flat at 4,622.9.

Among gainers, Hong Kong’s Hang Seng rose 0.4 percent to 23,649.48 and South Korea’s Kospi advanced 0.2 percent to 1,874.69.

Chinese shares were mixed Thursday — the benchmark Shanghai Composite Index lost 20.42 points, or 0.7 percent, to 2,983.53 while the Shenzhen Composite Index for China’s smaller, second exchange added 0.7 percent to 1,248.52.

Benchmark oil for December delivery was down 22 cents to $82.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.38 to settle at $82.54 on Wednesday.



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