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December 15, 2017
Tuesday, October 21, 2014

Wall Street extends rebound on earnings, ECB report

US stocks rallied today, with the S&P 500 notching a fourth straight session of gains boosted by strong corporate results, including Apple's.

The S&P 500 and Dow Jones were up more than 1 percent while the Nasdaq rose more than 2 percent, thanks to better-than-expected results from several major tech companies.

The bullish tone was helped by a story that said the European Central Bank is considering buying corporate bonds. It led to active futures trading before the opening bell and helped lift European stocks from last week's 13-month low.

The S&P 500 has gained more than 6 percent from its session low last Wednesday, when the benchmark nearly reached correction territory. It closed above both its 14-day moving average and its 200-day average.

The Dow Jones industrial average rose 215.14 points, or 1.31 percent, to 16,614.81, the S&P 500 gained 37.27 points, or 1.96 percent, to 1,941.28 and the Nasdaq Composite added 103.40 points, or 2.4 percent, to 4,419.48.

EUROPEAN MARKETS

Banks and shares in peripheral countries led a European rally today as the European Central Bank is considering buying corporate bonds to revive the region's economy.

The purchases, which the sources said could be approved in December and start early next year, are seen as helping banks, especially in struggling southern European countries, free up more of their balance sheet for lending.

The Euro STOXX banking index rose 3.3 percent, with the biggest gains seen in Greek, Italian and French banks.

The ECB began buying covered bonds yesterday, part of a private-sector asset-purchase programme that will also see it buy bundled loans known as asset-backed securities (ABS) later this year. However, there is concern at the ECB that these measures may have an insufficient impact to help support the economy.

After a year-long review of Europe's 130 biggest banks, the ECB is set to announce on Oct. 26 which have valued their assets properly and which have not, as well as whether banks need more capital to withstand another economic crash.

The FTSEurofirst 300 index of top European shares closed 2.1 percent higher at 1,299.26 points, extending its bounce from a 13-month low hit on Thursday.

Investors have been worrying about a deterioration in the pace of economic growth in Europe and other regions, such as China. These concerns were underscored by data showing China's economic growth slowed in the third quarter to its weakest since the 2008/09 global financial crisis.

German engine maker Deutz fell nearly 10 percent after it scrapped its 2014 operating profit forecast, citing unexpected costs related to warranties and goodwill for engines from the DEUTZ Compact Engines segment, primarily built in 2011.

Shares in Actelion gained 3 percent after it raised its full-year profit guidance for the second quarter in a row, buoyed by a healthy uptake of its new heart and lung drug.

Portugal Telecom sank again, down 8.2 percent as investors continued to dump the shares following the bankruptcy of Espirito Santo holding company Rioforte which has raised the risk Portugal Telecom will not recover 900 million euros ($1.2 billion) in debt from the company.

The stock has been tumbling in recent weeks on mounting uncertainty over the company after the resignation of chief executive Zeinal Bava from PT's Brazilian partner Oi and reports that Oi could sell its Portuguese assets.

ASIAN MARKETS

Meanwhile, Japanese stocks fell, with the market latching on to comments from the welfare minister on the country's public pension fund as an excuse to take profits from outsized gains the previous day.

The Nikkei share index lost 2.0 percent, closing at 14,804.28 and erasing half of its 4.0 percent gains on Monday, made on bets the Government Pension Investment Fund (GPIF) will increase stock allocations sharply.

Over the weekend, media reported that the $1.2 trillion GPIF would likely raise its allocation for domestic stocks to about 25 percent, a bit more than market expectations of around 20 percent. Minister Yasuhisa Shizoaki, responsible for the GPIF, said today that he did not know anything about media reports, disappointing investors who had hoped he might confirm such reports.

Amid lingering worries over global economic growth, the market used Shiozaki's comments as an excuse to sell stocks.

Adding to the sell-off in afternoon trade was data showing that China's economic growth in the third quarter fell to near a six-year low of 7.3 percent.

Despite being slightly better than expectations, the Chinese figures underscored the fragility of the global economy, and reinforced expectations that Beijing would need to unveil more stimulus measures to avert a sharper slowdown.

Market players also cited concerns at the spectre of deflation in the euro zone, uncertainty at the timing of the Federal Reserve's tapering, and the possible effects of Ebola on global trade as being a drag on growth. Japanese shares sensitive to fluctuations in the world's second-biggest economy fell in reaction to the Chinese figures.

Japan Steel Works Ltd lost 6.5 percent, while the Tokyo Stock Exchange grouping of machinery shares shed 2.8 percent. Sea transport shares lost 1 percent. The yen appreciated slightly against the dollar, rising to 106.37 yen, which hit exporters' shares.

Toyota Motor Corp shares lost 1.6 percent, while Honda Motor Co Ltd skidded 1.5 percent. The broader Topix fell 1.6 percent to 1205.36, while the new JPX-Nikkei Index 400 dropped 1.6 percent to 10,968.74.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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