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Europe: Stocks rise on earnings as dollar holds gains on Fed
[LONDON] Europe's benchmark stock index rose for the first time in three days after Credit Suisse Group AG and Unilever NV reported better-than-estimated results. Standard & Poor's 500 Index contracts rose and the dollar gained versus emerging currencies before data on jobless claims.
The Stoxx Europe 600 Index climbed 0.3 per cent by 8:12 am in London, as Credit Suisse jumped 4.8 per cent and Unilever added 2.5 per cent. Standard & Poor's 500 Index futures climbed 0.2 per cent as the greenback strengthened 1 per cent versus South Korea's won and 0.3 per cent to Turkey's lira. The Shanghai Composite Index advanced 2.4 per cent. Gold traded below US$1,100 an ounce and US oil hovered near a bear market. The New Zealand dollar climbed as much as 1.6 per cent.
European bonds rallied after Greece's parliament approved a second set of creditor-imposed reforms. Investors have switched their focus back to US monetary policy, with a better-than- forecast housing report Wednesday pushing the odds of a September rate increase to 50 per cent. The dollar's resurgence is undermining commodity prices as the World Bank sees abundant supply clashing with weakening global demand.
"The dollar-strength trend is continuing," said Tsutomu Soma, department manager of fixed-income business unit at Rakuten Securities Inc.
"While US corporate earnings are lackluster, economic data aren't bad, so money is flowing into the dollar on rate hike speculation. Commodity prices are falling on the back of the dollar's strength."
The Stoxx 600 climbed after slipping 0.6 per cent Wednesday for a second straight drop. The first raft of corporate results in Europe ex-UK suggests that second-quarter earnings growth could reach 15 per cent to 20 per cent, HSBC Holdings Plc strategists wrote in a note.
China Cars Daimler AG added 1.8 per cent as second-quarter operating profit jumped 54 per cent, beating analysts' predictions. Mercedes-Benz outpaced rival luxury-car brands in China and new models boosted sales.
Futures on the Nasdaq 100 Index added 0.3 per cent after the Nasdaq Composite Index slumped the most in two weeks as disappointing results from Apple Inc., Microsoft Corp. and Yahoo! Inc. rippled through technology stocks.
The MSCI Asia Pacific Index fluctuated as materials and energy shares led declines with technology companies. About 10 shares rose for every nine that fell.
The Shanghai Composite Index rose a sixth straight day, the longest streak of gains since May. A gauge of Chinese companies in Hong Kong flipped to a 1.1 per cent advance. The Hang Seng Index rose 0.6 per cent.
Analysts are predicting that Chinese stocks in Hong Kong will reverse the world's biggest rout and climb 34 per cent over the next 12 months. That's the biggest projected gain among major global markets.
Won, Kiwi South Korea's won slid to 1,164.75 per dollar, leading the Bloomberg JPMorgan Asia Dollar Index to its lowest level since July 2010. Malaysia's ringgit weakened 0.4 per cent and Indonesia's rupiah fell 0.3 per cent. The Thai baht lost 0.7 per cent.
The kiwi rose to 66.64 U.S. cents and gained 1.2 per cent against the Australian currency, the most in two weeks. Despite the 0.25 per cent rate cut, the central bank's statement "was not as dovish as markets were prepared for, particularly concerning the exchange rate," economists at Westpac Banking Corp. in Auckland wrote in a client note after the decision.
Commodity Index Average prices for fuels such as crude, natural gas and coal will tumble 39 per cent from 2014, while those for materials like metals and fertilizers will fall about 12 per cent, the Washington-based World Bank said in its quarterly "Commodity Markets Outlook" released Wednesday.
Everything from from oil to sugar has been declining as signs of expanding gluts drove the Bloomberg Commodity Index down 1.1 per cent on Wednesday to a 13-year low.
West Texas Intermediate is nearing a bear market, trading little changed at $49.19 a barrel after tumbling 3.3 per cent. US inventories expanded by 2.47 million barrels to 463.9 million last week, a government report showed on Wednesday. Supplies were forecast to drop by 2.2 million, according to a Bloomberg survey. Brent crude slipped 0.3 per cent, while Norway's krone slid 0.4 per cent.
Copper fluctuated in London after dropping 1.7 per cent to a two-week low Wednesday. Goldman Sachs Group Inc. lowered its price outlook by as much as 44 per cent through 2018 and expects Chinese demand to grow at the slowest pace in almost two decades. Global copper inventories tracked by the London Metal Exchange have more than doubled in the past year, signaling ample supplies. Nickel slid 0.4 per cent.
Spot gold climbed to US$1,098.21 an ounce, trading near the lowest close in five years on speculation that the U.S. central bank will increase interest rates soon after housing data backed the case for tightening. Palladium advanced to a one-week high.