European bourses seen up
EUROPEAN OUTLOOK & US/ASIAN SUMMARIES:
Global stock markets are stretching gains--but perhaps a bit too much. European bourses are likely to strike a slightly positive pose to start, with government debt issues little changed. The euro and pound are little changed against other majors, with gold and oil lower.
STOCKS:
European stock markets may try to extend gains on Wednesday with a nudge higher to start.
For Wednesday's opening, IG Markets is calling the FTSE up eight at 5291, the DAX up 10 at 5720 and the CAC up 10 at 3822.
Armando Guglielmetti, senior market strategist at InvestNews.ch in Switzerland, looks for bourses to firm on Wednesday with the U.S. market's gains encouraging more risk appetite and inflows. Insurance issues could set the pace.
In London, "the mining sector will once again be in focus and could provide some momentum for the wider" market, according to Ben Potter, IG Markets research analyst.
Investors took heart from the release of euro-zone producer-prices data on Tuesday, which reinforced expectations that the European Central Bank will keep its benchmark interest rate on hold after its next policy meeting Thursday.
"Overall, the fundamental drivers still look good. Earnings growth is robust, inflation is low and so are interest rates," said Patrick O'Hare, chief market analyst at independent research consultancy Briefing.com.
Investors on Wednesday will focus on the release of euro-zone services and composite PMI data and retail sales. In the U.K., services PMI data are also due, while in the U.S., the ADP employment report and Institute for Supply Management nonmanufacturing index are among the highlights. Also likely to attract attention is the European Commission's review of Greece's stability program.
Following the recent share price correction, Citi analysts said mining-sector preference is shifting back in favor of Rio Tinto, which it likes for its strong cash generation in iron ore and copper, balance sheet deleveraging potential and growth options.
Citi's commodity team raised its copper-price forecasts, and bulk forecasts are now 40% higher for prices of iron-ore fines.
With regard to metals and mining stocks overall, Societe Generale said the sector's correction is now complete. "Miners should be back for good," the analysts said.
Wall Street futures are a shade higher on Wednesday, after U.S. stocks climbed Tuesday as an unexpected rise in pending-home sales and a surprise quarterly profit from builder D.R. Horton lifted other stocks connected with the housing market.
Whirlpool rose 8.1%. The world's largest appliance maker by revenue predicted U.S. home-appliance sales would rise for the first time in five years as it reported a doubling in fourth-quarter profit. The company also provided a more bullish assessment than many have about the U.S. housing market, forecasting new housing starts will rise about 27% from 2009 and sales of existing homes will be up about 7%.
Ford Motor rose 2.4%, after the auto maker posted a 25% increase in January U.S. light-vehicle sales as fleet sales more than doubled, easily offsetting a 5% drop in retail business. Ford also put its U.S. market share at about 16% for January, about two percentage points higher than a year ago.
Stock markets also reacted to earnings of companies such as U.S. delivery giant UPS, an economic bellwether, and Dow Chemical, which exceeded estimates by most analysts, reinforcing the notion of a recovering economy.
Asian stock markets are mostly up Wednesday, helped by Wall Street gains, with resource-related and technology stocks leading the way higher in the region. But investors remained cautious ahead of key earnings reports and U.S. jobs data due later in the week.
"While the overall market mood seems good today, investors may stay on the sidelines later as they carefully await such major events this week," such as Toyota Motor's earnings Thursday and U.S. jobs data Friday, said Hiroichi Nishi, general manager at Nikko Cordial Securities in Tokyo.
Material stocks were lifting the Sydney stock market, after base metal prices rose Tuesday.
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February 03, 2010 01:00 ET (06:00 GMT)
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