World stocks reach one-month high
On Tuesday world stocks reached a one-month high as a rally in technology shares and expectations of strong corporate earnings helped balance worries about high inflationary pressures.
Oil prices were stable after their increase in recent weeks while the concerns related to flattening global government bond yield curves paused, helping investors recover some of their appetite for risky assets.
An MSCI gauge of world stocks reached its highest levels since the 17 September while U.S. stock futures were positive in early London trading.
Europe’s main stock index was higher as gains in mining and technology shares helped balance losses in Sweden’s Ericsson, which reported a hit from global supply chain problems.
The pan-European STOXX 600 gained 0.2%, with miners, utilities and technology stocks leading morning gains. Technology shares were also behind a rise in main Asian indexes, as they mirrored an overnight increase in their peers on Wall Street.
Capping overall gains in the market, telecom equipment maker Ericsson lost 3.3% following its quarterly results, while French food group Danone dropped 0.8% after recording rising costs and slower sales growth in the third quarter.
As Europe’s third-quarter reporting season kicks into high gear, investors are evaluating company results for any signs that supply-chain pressures, labour shortages and rising energy prices are starting to weaken profits.
Third-quarter profits at European companies are expected to increase 46.7% from the same period in 2020, according to Refinitiv I/B/E/S data, with earnings revisions by analysts decreasing recently but remaining positive.
The STOXX 600 has risen 2.8% so far in October after a 3.4% fall in the previous month, as investors turned to riskier assets in expectation of a steady earnings season.
However, adding to recent market volatility, investors have been aggressively pricing in interest rate hikes, particularly in the UK, to counteract an increase in energy prices and other bottlenecks driving general prices higher.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.