Equities rise as strong results at major US companies offset tech fears

Irish market treads water at end of truncated week’s trading

Global equity markets rose slightly, boosted by data indicating strength in the US economy and by upbeat results from some major US companies, while the dollar trended lower following the dovish US Federal Reserve comments earlier in the week.

The number of Americans filing initials claims for jobless benefits rose less than expected and factory activity in the US mid-Atlantic region expanded in April at a faster clip than expected.

Quarterly results from Morgan Stanley, Goldman Sachs and General Electric improved risk sentiment, though results from tech heavyweights Google and IBM were disappointing.

"When we look at the US results coming out today, there was a predominantly positive beat overall," Gerhard Schwarz, head of equity strategy at Baader Bank, said.


Morgan Stanley reported a 55 per cent jump in first-quarter earnings, General Electric posted a 12 per cent rise in overall industrial profits, and both earnings and revenue of Goldman Sachs beat market estimates. World stocks, as measured by the MSCI all-country index , rose 0.28 per cent.

In Dublin, there was little in the way of corporate activity as the market slowed down ahead of the Easter break. The Iseq edged fractionally lower, closing 16 points weaker at the end of the truncated week, on 4.906.78.

Britain's top shares ticked up after the upbeat US results drove up financials and allayed investor concerns about the current earnings season. Fund manager Schroders and Barclays , up 4.2 per cent and 3.9 per cent respectively, led gains in UK financials, which helped push the broader FTSE 100 index up 41.08 points, or 0.6 per cent, to 6,625.25 points, its highest close since April 10th.

"The strong banking numbers are obviously a key driver, especially for the FTSE which is cyclically led, and I think there's just a general sense that we might be coming into a period of slightly stronger numbers now," said Matt Basi, head of sales trading at CMC Markets.

Barclays' advance came as its chief executive Antony Jenkins embarked on the third review of its investment bank, with analysts predicting that this might lead to a cut in the division's size of up to 20 per cent.

RSA Insurance climbed 1.6 per cent after selling operations in the Baltics and Poland for a total of €348 million, the latest step by chief executive Stephen Hester to turn the insurer around after its Irish misadventure.

European equities rose in late trading after losing ground earlier in the session, with the positive US corporate news improving sentiment. The market was also supported by data showing a less-than-expected rise in US unemployment benefits.

Encouraging US results helped cyclical sectors to gather pace, with the STOXX Europe Automobile and Auto Parts index rising 1.7 per cent to become the top performing sector. The travel and leisure index rose 1.5 per cent, while insurers were up 1.1 per cent.

The rally in cyclical stocks results helped the FTSEurofirst 300 of top European shares to close 0.5 per cent higher at 1,328.71 points. However, investors remained wary of placing strong bets before a four-day Easter weekend in Europe and as some European companies reported earnings that were knocked by currency effects.

US stocks were little changed in choppy trading following three days of gains, as underwhelming results from tech giants Google and IBM were offset by quarterly numbers from Morgan Stanley and General Electric among others.

Economic data was supportive of equities, with the number of Americans filing new claims for unemployment benefits up less than expected last week and near pre-recession levels. Factory activity in the US mid-Atlantic region expanded in April at a faster clip than anticipated. The technology sector capped gains on the S&P, with Google shares down 3.4 per cent at $544.36 and IBM off 3.9 per cent at $188.76. – (Reuters / Bloomberg)