Global stocks rise on growth optimism
WASHINGTON: Global stocks rose yesterday amid optimism over global economic growth and corporate earnings. The three major US stock indexes added to their recent record run yesterday, as energy shares gained from a jump in oil prices and financials rose after strong private jobs data. JPMorgan and Bank of America rose about 1 percent, while Goldman Sachs’ 1.5 percent increase gave the biggest boost to the Dow. The rise was also supported by Facebook’s 1.4 percent gain ahead of its earnings report. US private employers hired 235,000 workers in October, the most since March and exceeding a median forecast of 200,000 among economists polled by Reuters, the ADP National Employment Report showed.
“We’re in a very positive environment,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey. “Economic data and earnings continue to remain a reason for optimism. The market will look for signs of a robust economy, and I think the momentum is in place.” Following the strong ADP data, focus shifts to Friday’s non-farm payrolls report for October. The data will reveal if the labor market has strengthened after a hurricane-ravaged September.
Third-quarter earnings have been largely positive, with 72.9 percent of the S&P 500 companies that have reported topping profit expectations, according to Thomson Reuters data. That is above the 72 percent profit-beat rate in the past four quarters.
Estee Lauder jumped nearly 10 percent after the cosmetics maker reported better-thanexpected sales and profit. US Steel surged 14 percent and Garmin climbed 3.7 percent after strong earnings.
The Federal Reserve was expected to keep interest rates unchanged at the end of its twoday meeting later today as speculation swirls on who will be its next leader, but will likely point to a firming economy as it edges closer to a possible rate rise next month. Eight of the 11 major S&P indexes were higher, led by gains in energy and financial sectors. Oil hit its highest since mid-2015 on data that showed OPEC significantly improved compliance with its pledged supply cuts and Russia is also widely expected to keep to the deal. Electronic Arts dipped 5 percent after the videogame publisher’s revenue forecast for the holiday shopping quarter narrowly missed estimates. Cognizant was the biggest percentage loser on the S&P, dropping 5 percent after results. Advancing issues outnumbered decliners on the NYSE by 1,979 to 578. On the Nasdaq, 1,677 issues rose and 648 fell.
Europe surges European stocks surged to two-year peaks yesterday, lifted by resilient company earnings and record highs set in Asia and New York, though a 6 percent slump in Standard Chartered shares kept the banking sector under a cloud. At 1000 GMT, the pan-European STOXX 600 rose 0.6 percent to 397.43 points, a level last seen in August 2015. Some of that was down to Germany’s DAX index which, playing catch-up after Tuesday’s holiday, jumped 1.3 percent to hit a fresh record high.
Markets continued to brush off concerns over Catalonia’s independence bid, pushing Spain’s IBEX up 0.5 percent. The European benchmark is enjoying its fifth straight day of gains and rose almost 2 percent in October, having also taken a cue from global markets which have been propelled higher by hopes of US tax cuts, economic recovery and a robust tech cycle.