I strongly doubt this will hold too long into the open of US mkt
They often follow US markets and sentiment, but they'll learn soon enough they've been duped once again
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World markets brush off soft Microsoft earnings
World markets brush off soft Microsoft, Amazon earnings as rally goes into 10th day
* By Pan Pylas, AP Business Writer
* On Friday July 24, 2009, 6:02 am EDT
LONDON (AP) -- World stock markets rose again Friday despite some downbeat U.S. earnings news from the likes of Microsoft Corp. and Amazon Inc. -- another sign that risk appetite remains stronger after a two-week rally that has sent many indexes around the world to 2009 highs.
In Europe, the FTSE 100 index of leading British shares was up 28.09 points, or 0.6 percent, at 4,587.89 despite the news that the British economy contracted by 0.8 percent in the second quarter of the year from the previous three month period, way more than the 0.3 percent expected in the markets.
Meanwhile, Germany's DAX index rose 33.40 points, or 0.6 percent, at 5,280.68 though investors in Frankfurt had more to cheer about after the respected Ifo Institute indicated that business optimism in Europe's biggest economy improved for the fourth month running. Its main business climate index rose to a nine-month high of 87.3 points in July from 85.9 points in June. Again the rise was bigger than anticipated, with economists projecting an increase to 86.5.
France's CAC-40 was also higher, up 19.55 points, or 0.6 percent, to 3,393.27.
The common thread running through the gains in Europe, as in Asia earlier, is the elevated nature of risk appetite at present following a run of better than expected earnings reports in the U.S. On Thursday, Germany's DAX closed at its highest level this year, while the FTSE and the CAC were not far off.
The rally is expected to continue in the U.S. at least at the open, though traders noted that the approach to the weekend could well prompt a bout of profit-taking, after both the Dow Jones industrial average and the broader Standard & Poor's 500 index have struck new 2009 highs.
Dow futures were 23 points, or 0.3 percent, higher at 9,014 while the S&P 500 futures rose 1.7 point, or 0.2 percent, to 970.60.
"Today could be a real battle between the bears and the bulls, it's the end of the week and we have seen a 12 percent rise in most indices and a 15 percent rise in crude oil in the last nine trading sessions alone so some profit-taking is due but the bulls are still in control," said Ian Horsley, an indices trader at Spreadex.
Many in the markets were surprised by the gains Friday after disappointing earnings from Microsoft and Amazon announced after Thursday's close.
Microsoft reported a 29-percent drop in second-quarter net profit and a 17-percent slide in revenue amid continuing weakness for personal computers around the world. Its shares fell more than 7 percent in after-hours trading.
Meanwhile, retailer Amazon reported a 10-percent fall in net profit for the second quarter, partly related to a $51 million payment to settle a long-standing dispute with former partner Toys R Us. It fell 7 percent in after-hours trading.
"I suspect that the 9-day equity rally enjoyed in Europe and the U.S. will be closed out today in the wake of disappointing results from Amazon and Microsoft," said David Buik, markets analyst at BGC Partners.
"Both failed to deliver the results expected after hours, which gave credence to the fact that the recession is far from over and it is not out the question that the U.S. could well be in for a double-dip recession," he said. |
