Intel gives world markets a boost
LONDON — World stock markets rallied Wednesday after an upbeat earnings statement from Intel Corp., the world’s largest chipmaker, and China’s economy showed more signs of a recovery.
Meanwhile, oil prices rose to a year high while the dollar slid to a 14-month low against the euro amid the rising appetite for risk.
In Europe, the FTSE 100 index of leading British shares was up 89.57 points, or 1.7 percent, at 5,243.72 while Germany’s DAX jumped 109.05 points, or 1.9 percent, to 5,823.36. The CAC-40 in France was 66.26 points, or 1.7 percent, higher at 3,867.65.
Wall Street is poised for big gains too when the markets open — Dow futures were 106 points, or 1.1 percent, at 9,915, while the broader Standard & Poor’s 500 futures rose 13.8 points, or 1.3 percent, to 1,082.60.
Intel has been the catalyst to Wednesday’s advance. In an after-hours statement on Tuesday, Intel unveiled better-than-expected third quarter profits and upped its earnings guidance for the year as demand for computers recovers.
“The better than expected numbers show one of the first major companies to report a more sustainable recovery instead of heavily cutting costs,” said James Hughes, market analyst at CMC Markets.
Investors around the world are focusing in on the third-quarter earnings statements, which are kick up a gear this week to see how much companies have been able to drive up earnings by generating revenues as opposed to cutting costs.
The market reaction to Intel has been positive because the company is seen as a bellwether for the health of the U.S. economy.
Major U.S. financial institutions take center stage over the rest of the week. JP Morgan Chase & Co. unveils its third-quarter earnings later, followed on Thursday by Goldman Sachs Group Inc. and Citigroup Inc. On Friday, it’s Bank of America Corp.’s turn.
The financial sector, which led the market down at the outset of the crisis, generally outperformed other sectors, leading the market on the way up since March’s lows.
“The figures from the banks could be a defining moment in the current rally; strong results could be seen as confirmation we are on the way to recovery, though the market will be very sensitive to any signs of bad news on the horizon,” said Tom Salmon, head trader at Spreadex in London.
Other companies due to report this week include Google Inc., IBM Corp. and General Electric Co.
World markets have also been buoyed by the news that the slump in China’s exports eased in September — a further sign that global trade is improving.
Combined with huge amounts of easy money freed up by governments to rebuild their economies and companies, growth in China has helped drive Asia’s markets in the last six months
China’s Shanghai index jumped 34.34 points, or 1.2 percent, to 2,970.53, while Hong Kong’s Hang Seng rose 419.12 points, or 2 percent, to 21,886.48.
Japan’s market was the region’s only major laggard with the Nikkei 225 stock average shedding 0.2 percent to 10,060.21 amid a stronger yen, which hurts exporters.
Elsewhere, Australia’s market gained 1 percent, India’s benchmark added 1.2 percent and Taiwan’s key index advanced 1.3 percent.
The slumping dollar sent commodities — which are largely priced in dollars and therefore tend to rise when the U.S. currency falls — surging once again. Gold traded near an all-time high around $1,070.
Oil blew past its previous 2009 high of $75 a barrel for a while, hitting $75.15, its highest level since October 2008. By late morning London time, a barrel of crude for November delivery was up 79 cents to $74.94.
The dollar fell 0.6 pen to 89.15 yen while the euro rose 0.3 percent to $1.4899, having earlier struck a new 14-month high of $1.4913.
Wednesday’s fall in the dollar has echoed developments in the currency markets ever since the financial crisis exploded over a year ago. Whenever investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro.
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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.
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