Euro­pean stocks gain on pos­i­tive earn­ings; lira re­bounds

The Pak Banker - - MARKETS/SPORTS -

Pos­i­tive earn­ings set the tone for eq­uity mar­kets while the dol­lar traded at a sev­en­week high as spec­u­la­tion grew the U.S. will raise in­ter­est rates this year.

Tech­nol­ogy com­pa­nies and car­mak­ers led the Stoxx Europe 600 In­dex higher af­ter earn­ings from soft­ware maker SAP SE and Volkswagen AG beat an­a­lysts' es­ti­mates. The dol­lar rose for a sec­ond day against the euro.

The lira re­bounded from near a record low as the coun­try's pres­i­dent vowed to make an "im­por­tant" an­nounce­ment in the wake of a failed coup at­tempt. Gold headed for the low­est close this month.

Cor­po­rate earn­ings are help­ing sus­tain a run that's added more than $4.5 tril­lion to the value of eq­ui­ties world­wide in three weeks. That along with bet­ter-than-es­ti­mated U.S. eco­nomic data is pro­vid­ing com­fort to in­vestors even as con­cern mounts that the U.K.'s vote to leave the Euro­pean Union will damp global growth. Mor­gan Stan­ley and In­tel Corp. are among U.S. com­pa­nies an­nounc­ing re­sults on Wed­nes­day, af­ter Mi­crosoft Corp.'s sales and profit sur­passed fore­casts. "There are some pos­i­tive sur­prises like SAP push­ing stocks up­wards," said Ralf Zim­mer­mann, an eq­uity strate­gist at Bankhaus Lampe in Dus­sel­dorf, Ger­many. "But over­all, I do not ex­pect the earn­ings sea­son to be strong enough to re­ally trig­ger a last­ing rally. Ex­pec­ta­tions are too high, and there will be on­go­ing down­wards re­vi­sions of longer-term growth ex­pec­ta­tions."

The Stoxx 600 added 0.9 per­cent at 6:18 a.m. in New York, with the vol­ume of shares chang­ing hands 38 per­cent lower than the 30-day av­er­age. S&P 500 In­dex fu­tures rose 0.4 per­cent af­ter the mea­sure slipped on Tues­day from an all-time high.

Europe's bench­mark gauge has al­ter­nated be­tween gains and losses each day since last week, af­ter a re­bound of about 9 per­cent fol­low­ing the slump af­ter the Brexit vote on June 23. In­vestors watch­ing cor­po­rate earn­ings re­sults are also wait­ing for Thurs­day's ECB meet­ing for clues about Pres­i­dent Mario Draghi's plans. Econ­o­mists in a Bloomberg sur­vey pre­dict rates will re­main un­changed this week. SAP climbed 4.2 per­cent and VW surged as much as 6.3 per­cent. Lonza Group AG jumped 6.4 per­cent as the Swiss de­vel­oper of drug in­gre­di­ents raised its an­nual guid­ance. Nordea Bank AB added 2 per­cent as its net fee and com­mis­sion in­come topped pre­dic­tions.

An­glo Amer­i­can Plc dragged min­ers lower, fall­ing 6.5 per­cent, af­ter cut­ting its cop­per pro­duc­tion tar­get. Man Group Plc lost 4.3 per­cent as its Chief Ex­ec­u­tive Of­fi­cer Em­manuel Ro­man was tapped to be CEO at Pa­cific In­vest­ment Man­age­ment Co. In the U.S., Mi­crosoft climbed 4 per­cent in early New York trad­ing. The earn­ings sea­sons so far has de­liv­ered more pos­i­tive sur­prises than neg­a­tive ones. An­a­lysts see profit at S&P 500 com­pa­nies fall­ing 5.8 per­cent in the sec­ond quar­ter, which would mark a fifth con­sec­u­tive slide, the long­est streak since 2009.

The lira was 0.4 per­cent stronger at 3.0294 per dol­lar, af­ter ear­lier sink­ing as much as 0.7 per­cent to 3.0623, within 0.5 per­cent of the all-time low reached in Septem­ber. The cur­rency is down 4.9 per­cent, the worst per­for­mance among ma­jor cur­ren­cies, since a failed coup at­tempt on Fri­day as au­thor­i­ties purged state in­sti­tu­tions, the cen­tral bank low­ered in­ter­est rates and and Moody's In­vestors Ser­vice said it may lower the coun­try's credit rat­ing to junk. Pres­i­dent Re­cep Tayyip Er­do­gan is due to make an an­nounce­ment on Wed­nes­day that an of­fi­cial said would boost so­cial co­he­sion and Turkey's demo­cratic cre­den­tials. The Bloomberg Dol­lar Spot In­dex climbed as much as 0.2 per­cent to its strong­est level since June 1, be­fore be­ing lit­tle changed. It ad­vanced 0.5 per­cent on Tues­day as a re­port showed new-home con­struc­tion in the U.S. rose more than econ­o­mists fore­cast in June.

A Cit­i­group gauge that tracks the de­gree to which Amer­i­can data are ex­ceed­ing pro­jec­tions is at an 18-month high and fu­tures put the chance of a Fed­eral Re­serve rate in­crease this year at 43 per­cent, up from 9 per­cent at the end of June.

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