Global stocks advance on solid earnings; euro at 8-month low

US crude gains; gold steadies

NEW YORK, July 23, (Agencies): Global equity markets edged higher on Wednesday as a backdrop of solid corporate earnings buoyed risk appetite, but worries over the Middle East and Ukraine kept demand strong for safe-haven assets such as bonds.

Shares in Europe and emerging markets, and most of Wall Street, rose, with the benchmark S&P 500 setting a new intraday record for a second day as results continued to beat forecasts.

Of the 149 companies in the S&P 500 that have reported results, 68.5 percent have beat expectations, a bit better than the past four quarters and five percentage points above the 20-year average of 63 percent, according to Thomson Reuters data.

MSCI’s all-country world index rose 0.17 percent, while the FTSEurofirst 300 rose 0.14 percent to close at 1,375.69.

The prospect of more sanctions against Russia over the Ukraine crisis and a downed Malaysian airliner kept risk aversion on the table in the bond market, where German 10-year yields nudged down to 1.147 percent, just shy of record lows.

The euro was 0.01 percent lower at $1.3463, while the dollar was 0.01 percent higher against the Japanese yen at 101.47.

Brent crude for September delivery was up 13 cents at $107.46 a barrel. US crude for September delivery was 51 cents higher at $102.90 a barrel.

US

The S&P 500 hit a record high on Wednesday, lifted by bullish earnings from companies like Apple and Microsoft, though technical resistance and conflicts in Ukraine and the Gaza Strip kept gains in check.

The S&P touched a record above 1,989 but the 1,985-1,990 area was developing into technical resistance, analysts said.

News of two Ukrainian fighter jets being downed Wednesday, near the area where a passenger jet was shot down last week, added to caution on markets.

“What we have today is a testing of the (resistance level) on the S&P,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Hogan said higher-than-average revenue beats by companies that have reported so far this quarter pointed to a stronger economy.

About 64.3 percent of S&P 500 components have reported revenue exceeding analyst expectations, above the 61 percent beat rate since 2002 and 55 percent over the past four quarters.

The Dow Jones industrial average fell 7.32 points, or 0.04 percent, to 17,106.22, the S&P 500 gained 5.1 points or 0.26 percent, to 1,988.63 and the Nasdaq Composite added 21.89 points or 0.49 percent, to 4,477.90. Apple shares jumped 2.8 percent to $97.37 even as it reported a smaller-than-expected 6 percent rise in quarterly revenue Tuesday. Sales surged 28 percent in greater China despite stiff competition in its third-largest market.

Microsoft shares rose 1 percent to $45.26 a day after it said it aimed to get its loss-making Nokia phone unit to break even within two years.

Boeing reversed a premarket gain and fell 2.2 percent to $126.86 even as it reported a 52 percent jump in quarterly profit on higher commercial aircraft deliveries. Boeing was the heaviest drag on the Dow industrials.

PepsiCo rose 3.3 percent to $92.07 after it reported a higher-than-expected quarterly profit and raised its full-year adjusted earnings forecast.

Biogen Idec reported sharply higherthan-expected quarterly revenue on surging sales of its new treatment for multiple sclerosis and raised its full-year profit forecast. Shares were up 10.9 percent at $336.93.

Intuitive Surgical rose 13.4 percent to $444.75 a day after reporting second-quarter earnings that were better than its dismal first quarter, though it was still its fifth straight quarterly decline.

Puma Biotechnology shares soared 264 percent to $214.95 a day after it said its experimental breast cancer drug met its main goal in a late-stage trial.

Europe

European stock markets inched higher Wednesday supported by upbeat earnings, as investors paused for breath after the previous day’s strong gains amid ongoing concern about the fallout from Ukraine.

Frankfurt’s main DAX index gained 0.20 percent compared with Tuesday’s close to end the day at 9,753.56 points.

London’s benchmark FTSE 100 index edged up 0.04 percent to 6,798.15 points, while in Paris the CAC 40 added 0.16 percent to 4,376.32.

“European equity markets edged slightly higher in today’s trading session, while investors remained cautious after the strong rebound across equities and commodities yesterday,” said Myrto Sokou at Sucden Financial.

Markets also took heart from news that Spain’s economy grew at its strongest rate for six years in the second quarter of the year. The news came after strong gains on Tuesday after news pro-Russian rebels had handed over the black boxes from the Malaysian passenger jet that came down in eastern Ukraine, killing almost 300 people.

UK

A profit warning by heavyweight drugs firm GlaxoSmithKline took the shine of Britain’s top equity index on Wednesday, offsetting gains in outsourcing group Capita and miner BHP Billiton.

Shares in GSK fell 4.7 percent, their worst drop since 2008, after the firm cut its 2014 earnings outlook, casting a shadow on its future payouts to shareholders.

The stock knocked 13.5 points off the FTSE 100, which closed up 2.81 points, flat in percentage terms, at 6,798.15 points. It had traded as high as 6,822.65 points before GSK’s update was published at 1100 GMT.

Johnson Matthey fell 1.2 percent after the world’s biggest producer of automotive catalytic converters posted an 11-percent fall in first-quarter underlying profit and said it expected a worse-than-expected impact from a stronger British sterling.

Bank of England officials this month discussed whether there was a case for an early rate rise, but were held back in part by strikingly low wage growth and signs of weakness abroad, the minutes showed on Wednesday.

Helping support the FTSE, Capita rose 4.8 percent to the top of the FTSE 100 after the group, which runs services from the Ministry of Defence pension scheme to police radio systems, posted an 11 percent rise in first-half organic revenue.

While Capita has benefited from scandals over the private provision of public services which damaged rivals G4S and Serco, the group’s strong results also reflect central and local government and private sector companies outsourcing work to cut costs in the face of tighter budgets.

Asia

Asian markets mostly rose Wednesday, adding to the previous day’s rally, following a positive lead from Wall Street while concerns over the Ukraine air crash crisis ease.

The euro was wallowing at multi-month lows against the dollar and yen as the West considers another round of sanctions against Russia for its support of Ukrainian rebels who have been accused of shooting down Malaysia Airlines flight MH17 on Thursday.

Sydney rose 0.6 percent, or 33.41 points, to close at 5,576.7 and Shanghai added 0.15 percent, or 3.01 points, to 2,078.49, while Hong Kong put on 0.80 percent, or 189.76 points, to 23,971.87.

However, Seoul was marginally lower, giving up 0.61 points to finish at 2,028.32 while Tokyo slipped 0.10 percent, or 14.72 points, to 15,328.56 as a stronger yen weighed on exporters. In other markets: Wellington rose 0.25 percent, or 12.66 points, to 5,146.53.

Telecom was up 1.93 percent at NZ$2.90 and Warehouse Group eased 0.96 percent to NZ$3.08.

Manila ended 0.33 percent higher, adding 22.98 points to 6,892.92.

Universal Robina Corp rallied 4.75 percent to 165 pesos as the exchange lifted its suspension on trading after the food giant announced Monday that it was buying New Zealand snack-maker Griffin’s for $610 million. Alliance Global Group gained 0.93 percent to 27 pesos.

Taipei was closed because of Typhoon Matmo.

Mumbai advanced 0.47 percent, or 121.53 points, to close at 26,147.33 points.

Financial Technologies India surged 9.99 percent to end at 332.50 rupees and tyre maker MRF rose 7.27 percent to end at 24,651.10 rupees.

Bangkok added 1.36 percent or 20.75 points to 1,541.56.

Coal producer Banpu rose 3.28 percent to 31.50 baht, while Siam Cement gained 2.20 percent to 464.00 baht.

Singapore advanced 0.72 percent, or 23.79 points, to close at 3,340.70.

United Overseas Bank rose 1.31 percent to end at Sg$24.04 and Singapore Airlines finished 0.19 percent lower at Sg$10.55.

Jakarta rose 0.19 percent, or 9.71, to 5,093.23.

Mobile phone provider Indosat rose 1.01 percent to 4,000 rupiah, while car maker Astra International fell 0.32 percent to 7,700 rupiah.

Kuala Lumpur’s main index edged up 0.47 points, or 0.03 percent, to 1,871.83.

MISC added 1.7 percent to 6.63 ringgit while UMW Holdings gained 0.9 percent to 11.62. Malaysia Airlines shares slipped 2.2 percent to 0.225 ringgit.

Oil

Oil futures rose on Wednesday, with US crude outpacing Brent, after oil stockpiles in the United States fell more than expected.

The US Energy Information Administration said US crude stocks fell by 4 million barrels last week, while gasoline and distillate stocks rose.

Crude oil inventories at Cushing, Oklahoma, the delivery point of the US crude contract, fell by 1.45 million barrels, the EIA said.

Price gains were curbed by a build of 5 million barrels in combined inventories of gasoline and distillates and a 1 percent decline in gasoline demand.

Brent crude for September delivery was up 9 cents at $107.42 a barrel at 12:59 pm EDT (1659 GMT), after slipping 35 cents in the previous session. US crude for September delivery rose 43 cents to $102.82 a barrel. US crude’s discount to Brent hit a low of $4.51 earlier in the session, close to its lowest in three months, as high domestic refinery utilization rates signaled strong near-term demand for crude oil and low inventories at Cushing.

Traders said that same dynamic also pushed US cash crude “roll” prices as high as $5 a barrel on Wednesday, in turn vaulting the front-month futures contract up by nearly $1 to a session high of $103.34.

The “roll” period lasts for three days after the expiry of the front-month US light crude contract. Traders and refiners adjust their crude slate during this period, and US cash crude grades are priced against West Texas Intermediate (WTI) in Cushing.

Brent has fallen by about 7 percent since mid-June as weak demand from refineries in Europe, due to low profit margins, has crimped consumption.

Gold

Gold steadied on Wednesday after the previous day’s drop, supported by simmering conflict in Ukraine and the Middle East, but under pressure from buoyancy in stock markets after positive US data and corporate earnings.

Sluggish physical demand in Asia in the seasonally quiet summer period is also weakening support for any price rally.

Other than seasonality, the possibility of a further drop in prices due to an improving US economic outlook and stronger dollar is also keeping buyers away, dealers said.

Spot gold was at $1,307.90 an ounce by 1410 GMT, little changed from $1,307.00 late on Tuesday. US gold futures for August delivery were up $3.10 an ounce at $1,309.40.