Global stock markets rose yesterday, helped by upbeat European earnings and US earnings that were not as bad as feared, but the euro fell on worries about possible Greek loan defaults.
Wall Street opened higher and European trading was strong, with the pan-regional FTSEurofirst 300 index up 0.93 per cent after a 1.4 per cent jump by the Nikkei and 2 to 2.5 per cent increases in China's main markets. The MSCI gauge of stocks in major markets was up 0.35 per cent.
In Europe, Publicis, Sky and ARM Holdings all rose more than four per cent after reporting results, with the overall picture of a weaker euro and improving economic conditions driven by the European Central Bank's (ECB) bond-buying program drawing investment into equities.
In the US, Dow components Verizon, DuPont and United Technologies beat expectations even as the strong dollar weighed on DuPont and UTX. IBM shares were up 0.6 per cent after it beat low expectations.
“It's still early in the week, and things could change with some major tech stock reporting later in the week, but there has been the absence of a real negative factor,” said Brian Fenske, head of sales and trading at ITG in New York.
The Dow Jones industrial average rose 12.81 points, or 0.07 per cent, to 18,047.74, the S&P 500 gained 4.83 points, or 0.23 per cent, to 2,105.23 and the Nasdaq Composite added 28.16 points, or 0.56 per cent, to 5,022.76.
The euro was down 0.45 per cent at $1.0688 as Greece remained on investors' radar amid media reports that the ECB was considering upping the haircuts it applies to Greek assets used as collateral for its cheap funding.
Even after several rounds of negotiations, hopes are slim that Athens will be able to convince euro zone finance ministers to continue their financial support at meetings on Friday. This could mean it runs out of cash by the end of the month.
On Monday, Greece ordered state entities to park spare cash at the central bank in a bid to pay civil service salaries and IMF loan repayments due in early May.
An unprecedented debt default in the currency bloc could open the way for Greece to exit the euro, though ECB Vice President Vitor Constancio said on Monday that a country that defaults would not have to ditch the currency.
“The full extent of a Greek exit (from the euro) is not being priced in,” said Grant Peterkin, manager of absolute return bond fund at Lombard Odier.The dollar gained for a third straight day, trading up 0.32 per cent against a currency basket.