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New York - Global equities and the euro rose on
Tuesday on strong corporate earnings, while solid demand at European government
debt sales eased concerns about the euro zone’s growing economic slump.
Yields fell on government debt of the Netherlands and some southern
European countries that have been at the heart of the debt crisis after the
Netherlands sold bonds without problems, calming markets a day after the Dutch
government collapsed in a crisis over budget cuts.
Data on the US housing market also raised optimism about the US
economic recovery and helped stoke risk appetite.
Big US manufacturers continued a wave of strong earnings growth,
with United Technologies Corp, 3M Co, Illinois Tool Works and Parker-Hannifin
Corp posting results that topped Wall Street forecasts.
Recovering US demand helped the four companies offset the weak
European economy and slowing growth in China, which until recently had been a
reliable source of rapid growth for big American companies.
AT&T Inc also beat forecasts, advancing 4.0%. With 153
components of the S&P 500 Index having reported their results, more than
three-fourths topped expectations, according to Thomson Reuters data.
“These results serve as a reminder that while near-term volatility
is all but certain, the strength of corporate America remains intact, and
valuations remain attractive,” said Mark Martiak, senior wealth strategist at
Premier/First Allied Securities in New York.
Stocks rose on Wall Street.
The Dow Jones industrial average was up 115.15 points, or 0.89%, at 13 042.32. The Standard & Poor’s 500 Index was up 8.13 points,
or 0.59%, at 1 375.07. The Nasdaq Composite Index was up 4.00 points, or
0.13%, at 2 974.45.
In Europe, shares rebounded as companies boasted bullish updates,
such as French tire maker Michelin, which rose 6.1%. The FTSEurofirst 300
index of top European companies closed up 1.1% to 1 032.93, a day after
hitting a three-month low.
Bill Dinning, head of strategy at Kames Capital, said there did not
seem to be any doubt that companies are in robust health. “That’s reflected in
strong earnings, in high levels of margins and in very strong balance sheets,”
he said.
Global shares as measured by the MSCI world equity index rose 0.7% at 323.62.
The euro rallied against the dollar after two U.S. housing reports
eased worries about the US economic recovery while stoking risk tolerance
against the backdrop of the start of a two-day meeting of Federal Reserve
policy-makers.
“We’re really seeing the euro gain a footing,” said David Song,
currency analyst at DailyFX. “Market participants are taking on more risk on the
positive housing data.”
US single-family home prices rose in February for the first time
in 10 months, according to the closely watched S&P/Case-Shiller report.
A composite index of prices in 20 US metropolitan areas gained
0.2% in February on a seasonally adjusted basis, Case Shiller said,
matching economists’ forecasts.
A separate Commerce Department report showed new single-family home
sales sagged in March to their lowest level in four months, but sales in the
prior three months were revised higher than initially thought.
The euro, which had its worst day in a week on Monday, gained about
0.4% to $1.3208.
The US dollar was down against a basket of major trading-partner
currencies, with the dollar index down 0.33% at 79.154.
US Treasury debt prices dipped on easing political concerns
regarding France and the Netherlands, while investors waited for US debt sales
and results from the Fed meeting.
The benchmark 10-year US Treasury note was down 6/32 in price to
yield to 1.96 percent.
The sudden collapse of the Dutch government as it tried to cut its
budget, a rise in the vote for populist parties in the French election and
business outlook data indicating Europe’s recession has months to run have
shifted sentiment this week.
“Institutional investors are finding it quite difficult making a
decision on where to invest in Europe right now,” said Ian Stannard, head of
European FX strategy at Morgan Stanley.
A widely watched auction of fresh debt by the Dutch government went
off smoothly even though ratings agency Moody’s warned the country’s AAA rating
could be at risk if the there was any weakening in the commitment to fiscal
discipline from the political turmoil there.
Spanish and Italian bond auctions were well covered, but their
borrowing costs rose again, showing political uncertainty was still uppermost in
investors’ minds.
Brent crude was a little weaker, below $119, as lingering concerns
over the euro zone economy overshadowed the latest production problems at the
UK’s largest oilfield.
Brent crude futures dipped 43 cents to $118.28 a barrel. U.S. crude
futures rose 59 cents to $103.70.
