WB: World markets get another lift from US earnings
LONDON (AP) — World stock markets mostly rose Tuesday amid further strong U.S. corporate earnings and ahead of an assessment of the U.S. economy from Federal Reserve chairman Ben Bernanke.
In Europe, the FTSE 100 index of leading British shares was up 50.84 points, or 1.1 percent, at 4,494.46 while Germany's DAX rose 88.95 points, or 1.8 percent, to 5,119.10. The CAC-40 in France was 53.37 points, or 1.6 percent, higher at 3,324.31.
On Wall Street, the Dow Jones industrial average was up 68.10 points, or 0.8 percent, at 8,916.25 soon after the open, while the broader Standard&Poor's 500 index rose 5.4 points, or 0.6 percent, to 956.53.
More upbeat earnings reports from a number of big-name companies on Tuesday added to investors' recent optimism, which has helped stocks around the world rally for the last seven sessions.
Coca-Cola Co., the world's largest beverage maker, said its earnings jumped by 43 percent in the second quarter even though sales fell, while chemical maker DuPont Co. and drug company Merck&Co. reported better than expected results despite drops in their quarterly profit.
Since last Monday, the Dow Jones industrial average and the broader Standard&Poor's 500 index have added around 7 percent, while Britain's FTSE has climbed over 6 percent.
"So far, second quarter earnings season has proven to be a net positive for stocks and as a result the (S&P) broad market index has rallied back towards its late-June intraday high of 956 after having threatened to break below key support at 875 after a weaker than expected June employment report," said Steven Ricchiuto, chief economist at Mizuho Securities.
"With only a handful of companies already having reported earnings, the positive surprise ratio is running well above its long-term historical average as a number of consumer discretionary and financial companies beat bottom-up consensus earnings expectations," he added.
The focus over the rest of the week will remain on U.S. earnings — among those to report include financial services and travel company American Express Co. and aircraft maker Boeing Co.
The reporting season also kicks into gear in Europe this week, with pharmaceuticals company GlaxoSmithKline PLC, mobile phone operator Vodafone PLC, Swiss bank Credit Suisse AG and French foods company Danone SA.
Investors will also be looking to Washington for direction when Bernanke makes his half-yearly testimony to Congress later. A key concern for investors is how the central bank plans to eventually undo extraordinary emergency measures such as pumping money into the U.S. economy at the same time as slashing borrowing costs to near zero percent.
In a column Tuesday in The Wall Street Journal, Bernanke wrote that the central bank "has many effective tools to tighten monetary policy when the economic outlook requires us to do so." Yet, considering current economic conditions, such moves won't likely be warranted for some time, he said.
Earlier in Asia, Tokyo's market outperformed the region to hit a two-week high after being closed for a holiday Monday, as investors seemed to shrug off the unfolding shake-up in Japanese national politics. Japan's Cabinet agreed to dissolve the powerful lower house of parliament, setting the stage for national elections that could topple the country's ruling party.
Tokyo's benchmark Nikkei 225 stock average closed up 256.70 points, or 2.7 percent, to 9,652.02 but Hong Kong's Hang Seng closed down by only 0.64 of a point at 19,501.73.
Elsewhere in Asia, South Korea's Kospi rose 0.7 percent to 1,488.99. Benchmarks in Australia and Taiwan also climbed modestly. China's Shanghai market dropped 1.6 while Singapore was marginally lower.
The rally in stock markets continued to drive up oil prices, which earlier this month dipped below $60 a barrel for the first time in months. Benchmark crude for August delivery traded at $65.21 a barrel, up $1.23 in the session.
The stock gains also gave the euro a further nudge higher against the dollar — in recent weeks the dollar and stocks have moved in opposite directions. As investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro. Conversely, when shares have fallen, the dollar has tended to rise as it is widely considered a safe haven asset despite all the problems afflicting the U.S. economy.
The euro was up another 0.2 percent at $1.4255 and near its 2009 high of $1.4337 achieved in early June.
