Ford cheers world markets with lower cash burn
13 minutes ago
By PAN PYLAS
AP Business Writer
(AP:LONDON) European and U.S. markets rose sharply Friday as Ford Motor Co. unveiled better-than-expected first quarter results and investors awaited news about the stress tests on 19 of the big U.S. financial institutions.
In mid afternoon European trading, Britain's FTSE 100 was up 101.82 points, or 2.5 percent to 4,120.05 while Germany's DAX climbed 107.71 points, or 2.4 percent to 4,645.92. France's CAC 40 rose 79.36 points, or 2.6 percent, to 3,088.
On Wall Street, the Dow Jones industrial average was 100.83 points, or 1.3 percent, higher at 8,057.89 soon after the open while the broader Standard & Poor's 500 index spiked 11.04 points, or 1.3 percent, to 862.96.
Confidence in the U.S. was already higher after a strong bounceback at the end of Thursday's session.
That was further cemented by the news that the loss at Ford, the second-largest U.S. automaker, was less than expected and that the company burned through far less cash during the quarter than in the fourth quarter. The stock surged 20 percent in early trading.
The news from Ford _ widely considered to be in better shape than its rivals General Motors Corp. and Chrysler LLC _ comes as investors awaited details on the methodology for the "stress tests" that regulators have given to 19 of the largest U.S. financial institutions.
Officials will tell banks in private how they did, but investors will be scrutinizing the methods for clues about which banks may be in trouble. And though the full results won't be officially released until May 4, investors will be on guard for any leaks or clues as to how the banks have performed.
Herve Goulletquer, an analyst at Calyon Credit Agricole, said the publication of the stress test results, could be a "key element" in determining the direction and magnitude of the next move in markets.
In recent weeks, the markets have traded in a narrower range, often rising modestly one day and falling the next. Previously, they had recovered strongly from multiyear lows amid rising hopes that recovery could emerge this year and that the world's governments and central banks had done enough to get to grips with the recession.
"The performances of those very same markets through much of April have been indicative of a rekindled element of investor doubt, with many of the major equity indexes tracking broadly sideways over the period," said Neil Mellor, an analyst at Bank of New York Mellon.
"It must be said that this hesitancy has been largely a product of nervousness over corporate earnings season and the burgeoning cost of the economic clean-up operation, whilst data pointing to a diminishing rate of economic contraction have attained a growing degree of consistency," he added.
Britain's FTSE managed to stay in positive territory despite news that the British economy shrank in the first quarter at its sharpest rate since 1979, as the financial crisis continued to wreak havoc on banks, retailing and manufacturing.
In its first estimate for the January-March period, the Office for National Statistics said that gross domestic product, or GDP, contracted by a massive 1.9 percent from the previous three-month period. That was far more than the 1.6 percent decline posted in the fourth quarter of 2008 and above analysts' expectations for a more modest 1.4 percent drop.
But there was better news for Europe's biggest economy. German business confidence rose slightly in April as firms assessed their future with less skepticism. The Ifo institute's business climate index rose to 83.7 points in April from 82.2 points in March. The March reading was the lowest in 26 years.
In Asia, most markets dropped as investors braced for news about the "stress tests." Volumes were thin, suggesting investors are hesitant to place large bets one way or the other. Crude oil prices were steady, while the dollar slid almost 1 percent against the yen and the euro.
Japan's Nikkei 225 stock average lost 139.02 points, or 1.6 percent, to 8,707.99, and Hong Kong's Hang Seng added 44.39 points, or 0.3 percent, to 15,258.85 in volatile trade.
South Korea's Kospi was off 1.1 percent at 1,354.10. The Korean economy, Asia's fourth largest, narrowly avoided slipping into recession in the first quarter but officials still predict a contraction for the full year.
Markets in Australia, China and Singapore also fell, while India's Sensex rose 1.6 percent to 11,304.81.
Benchmark crude for June delivery rose $1.35 cents to $50.97. The contract rose Thursday by 77 cents to settle at $49.62.
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AP business writers Louise Watt in London and Jeremiah Marquez in Hong Kong contributed to this report. |
