STOCKS in Europe and Asia rose and US index futures advanced, pushing the MSCI World Index to the longest stretch of gains since 2003, as companies from Roche Holding AG to ABB Ltd. reported earnings that beat estimates.
Roche, the world’s biggest maker of cancer medicines, and ABB, the largest builder of electricity grids, climbed more than 3%. Credit Suisse Group AG, the biggest Swiss bank by market value, added 3% after sales and profit increased.
The MSCI World rose 0.1% in early trading in London, a ninth straight day of gains. The gauge of 23 developed nations has climbed 9.2% since July 10 after better-than- estimated results from companies including Goldman Sachs Group Inc., Johnson & Johnson and Apple Inc.
“Second-quarter earnings are coming in a little bit better than expected, but then expectations have been entirely crushed,” Richard Cookson, the London-based head of global asset-allocation research at HSBC Holdings Plc, said on Bloomberg Television. Forecasts “are going to rise in the third and fourth quarter, but the question is: how much? Investors are expecting a very chunky rise as that is what valuations are telling us. I have my doubts.”
Europe’s Dow Jones Stoxx 600 Index added 0.2%. The MSCI Asia Pacific Index gained 0.4%, while Standard & Poor’s 500 Index futures increased 0.2%.
Improving company profits will spur the biggest year-end rally for European stocks since 2006, according to a survey of strategists. Benchmark indexes in the region may climb 11% between June 30 and the end of 2009, according to the average prediction of 11 European market analysts surveyed this week by Bloomberg. That compares with an 8.4% advance for the S&P 500 estimated by 10 US strategists.
Asian stocks increased for an eighth day, led by auto makers and technology companies, as a weaker yen boosted the prospects for Japanese export earnings and US housing prices unexpectedly gained.
Roche advanced 3% to 159.2 Swiss francs after raising its forecast for the year because of increased savings from the acquisition of US partner Genentech Inc. Earnings per share excluding some items will probably rise by double-digits in local currencies this year and next, with sales set to outpace the industry’s, the Swiss drugmaker said.
Roche’s first-half net income fell 28% to 3.47bn francs as costs to integrate Genentech offset higher drug sales. Excluding those expenses, Roche earned 5.21bn francs, surpassing the median analyst estimate of 4.78bn francs in a Bloomberg survey.
ABB climbed 3% to 18.52 francs. Net income in the second quarter fell 31% to 675 million. Analysts had predicted 564 million, according to a 12-strong survey by Bloomberg.
Credit Suisse rose 3% to 50.45 francs as the bank said second-quarter profit rose 29% as revenue from trading stocks and bonds doubled. Net income increased to 1.57bn francs from 1.22bn francs a year earlier. Earnings matched the median estimate of 14 analysts surveyed by Bloomberg.
More than half of all profits at European companies that have reported results since July 8 beat forecasts, according to Bloomberg data. Earnings have shrunk 27% in the period for companies on the Stoxx 600, while 32 of the 57 companies have reported better-than expected results, the data show.
Porsche SE slid 4.3% to €49.40 as Chief Executive Officer Wendelin Wiedeking said he will step down after 16 years, paving the way for a merger between the 911 sports-car maker and Volkswagen AG. Wiedeking, as well as Chief Financial Officer Holger Haerter, will leave with immediate effect.
Home re-sales in the US probably rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices, economists said before a report by the National Association of Realtors due later this morning in Washington.
Later today, a report from the Labour Department may show first-time applications for jobless benefits rose by 33,000 to 555,000 in the week ended July 18, economists forecast. The number of workers filing claims dropped by 95,000 over the previous two weeks, reflecting changes in the timing of mid-year auto shutdowns to retool for the new model year.
