US and European equity markets rose yesterday after Alcoa’s better-than-expected results boosted investor sentiment on first-quarter corporate earnings, while the dollar gained on hopes for higher US economic growth after a bitter winter.

Alcoa’s earnings came in ahead of analysts’ expectations in the first three months of the year late on Tuesday even as the company’s adjusted profit fell on declining aluminum prices.

Shares of Alcoa gained 4.3 per cent to $13.065, vying for the best performer spot among components of the benchmark S&P 500 index.

Earnings for companies in the S&P 500 are projected to have increased just one per cent from last year’s first quarter, Thomson Reuters data showed. The forecast is down sharply from the start of the year, when profit growth was estimated at 6.5 per cent.

“These kinds of consolidation rallies really take time to shake out the emotion that goes with both sides,” said Rick Meckler of hedge fund LibertyView Capital Management in Jersey City, New Jersey.

“Earnings will really help give this market some forward direction, but they are in front of us and haven’t really hit yet,” Meckler said.

The pan-European FTSEurofirst 300 index of leading regional shares rose 0.3 per cent, while MSCI’s all-country equity index rose 0.22 per cent.

The Dow Jones industrial average was up 39.82 points, or 0.24 per cent, to 16,295.96. The S&P 500 gained 4.61 points, or 0.25 per cent, to 1,856.57 and the Nasdaq Composite added 26.465 points, or 0.64 per cent, to 4,139.451.

Treasuries have had a good run

The dollar rebounded from one of its worst performances against the yen as the outlook for the greenback brightened on expectations for stronger economic data.

The dollar posted its largest one-day fall versus the yen in more than seven months on Tuesday, with investors buying back the Japanese currency after the Bank of Japan held off on additional monetary easing. The greenback’s bounce yesterday was the first in four days.

“Our view going into 2014 is broad-based dollar rally predicated on the acceleration of the US economy and rising US rates,” said Mark McCormick, currency strategist at Credit Agricole in New York.

After hitting lows of 101.52 yen in US trade on Tuesday, the dollar recovered to trade 0.05 per cent higher at 101.84. The euro rose 0.2 per cent against the yen at 140.77.

Against the dollar, the euro was up 0.2 per cent at 1.3822. US Treasuries prices fell as traders trimmed their bond holdings in advance of a $21 billion auction of 10-year notes and the Federal Reserve’s release of the record of its policy meeting last month.

The benchmark 10-year Treasury note was down 4/32 in price to yield 2.705 per cent.

“Treasuries have had a good run. There’s some risk with this week’s supply,” said Robert Tipp, chief investment strategist at Prudential Fixed Incom.

Brent crude rose toward $108 a barrel as rising tension between Russia and Ukraine overshadowed the bearish impact of a substantial rise in crude oil stockpiles in the US.

While the Ukraine crisis may not directly impact global oil supplies and trade, the risk premium on oil is rising as investors worry the Kremlin’s stand-off with the West could get worse.

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