Investors Welcome Positive Start to US Earnings

by Carlo Piovano
Thursday Jan 10, 2013
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A positive start to the U.S. corporate earnings season and a sharp improvement in China’s monthly trade helped boost world markets Thursday. The euro, meanwhile, jumped on news the European Central Bank decided not to cut interest rates.

Stock indexes rose after a handful of better-than-expected results from U.S. companies sparked gains on Wall Street. Consumer products maker Helen of Troy, whose brands include Dr. Scholl’s and Vidal Sassoon, reported a 15 percent profit increase. Electronic payments processor Global Payments said its fiscal second-quarter earnings rose nearly 15 percent, beating analyst expectations.

A rebound in trade figures for China, the world’s second-largest economy, also suggested a recovery in global demand, lifting investment sentiment. Export growth more than quadrupled in December from November’s level, to 14.1 percent. Imports rose 6 percent after failing to grow at all in November.

By midafternoon in Europe, Britain’s FTSE 100 was up 0.2 percent to 6,111.62 while Germany’s DAX rose 0.5 percent to 7,761.99. France’s CAC-40 was flat at 3,718.40.

Wall Street was also poised for gains. Dow Jones industrial futures rose 0.4 percent to 13,380 while S&P 500 futures added 0.5 percent to 1,462.80.

The euro jumped 1 percent to $1.3195 after the ECB left its interest rate at the record low of 0.75 percent and said it had not even considered the possibility of a cut. A currency’s value usually tracks expectations of interest rates.

In a press conference, ECB President Mario Draghi said the eurozone economy should start to grow again later this year. He added, however, that the region has yet to reach a turning point and that governments must press on with savings cuts.

Earlier in Asia, Japan’s Nikkei 225 index rose 0.7 percent to close at 10,652.64. South Korea’s Kospi added 0.8 percent to 2,006.80. Australia’s S&P/ASX 200 advanced 0.3 percent to 4,723. Benchmarks in Singapore, Taiwan and New Zealand also rose.

Hong Kong’s Hang Seng gained 0.6 percent to 23,354.31 following a decision by the China Securities Regulatory Commission to allow some initial public offerings of mainland companies to be carried out in Hong Kong.

The move is an effort to clear a backlog of IPOs that the understaffed CSRC cannot handle, said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

"It’s a practical way to handle an emergency problem," Lun said. It will boost the Hong Kong exchange’s market capitalization by one-third, he said.

A weakening yen helped propel Japan’s export-reliant carmakers higher. As the dollar rose another 0.3 percent against the yen, to 88.18 yen, shares in Mazda Motor Corp. soared 10.2 percent. Honda Motor Co. gained 2.5 percent.

Hong Kong-listed Aluminum Corp. of China surged 6.5 percent a day after U.S. aluminum giant Alcoa forecast demand would grow 7 percent in 2013, up from a 6 percent gain in 2012.

Benchmark crude oil contract for February delivery was up $1.15 to $94.25 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 5 cents to close at $93.10 per barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.3101 from $1.3053.

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