Following a long period when investors have been focusing on other issues, such as Japan’s earthquake and tsunami, Europe’s debt crisis and the unrest in the Arab world, earnings have returned to prominence.
So far, the latest corporate results have been generally positive, with a number of companies announcing forecast-busting earnings in another sign that the US economy, the world’s largest, is performing strongly.
Particularly encouraging was Wednesday’s after-hours statement from Apple Inc. that its hit iPhone helped earnings nearly double. Apple’s technology peer Intel Corp. also beat expectations, helping to buoy sentiment toward the technology sector.
General Electric Co., McDonald’s Corp. and Morgan Stanley and Co. also beat expectations Thursday.
“With most markets closed tomorrow, overseas equity markets are ending the week on a positive note, with spirits boosted by a string of positive earnings reports yesterday (Wednesday) and today (Thursday), and one in particular that bears the symbol of a fruit,” said Jennifer Lee, an analyst at BMO Capital Markets.
In Europe, Germany’s DAX closed 0.6 percent higher at 7,295.49 while the CAC-40 in France rose 0.4 percent to 4,021.88. The FTSE 100 index of leading British shares ended down 0.1 at 6,018.30.
In the US, stocks were posting their third day of gains following Monday’s retreat when investors were spooked by Standard and Poor’s warning that the US faces a one-in-three chance of having its triple A credit rating downgraded. The Dow Jones Industrial Average was up 0.3 percent at 12,486 while the broader Standard and Poor’s 500 futures rose 0.5 percent to 1,337.
Buoyant stock markets are an indication of heightened investor appetite for risk. That affects other markets, too, and in the currency markets the euro and the Australian dollar were the big gainers as investors looked for better interest rate returns instead.
“Monday is a distant memory and markets have shifted from shunning risk into the upcoming holiday period to assuming as much of it as they can,” said Robert Ryan, a foreign exchange strategist at BNP Paribas.
The euro was up another 0.4 percent at $1.4581 by late afternoon London time. Earlier it had advanced to $1.4648, its highest level since December 2009.
Despite occasional bouts of weakness, such as on Monday when the dollar — perhaps surprisingly — gained support from its widely-perceived status as a safe haven asset, the euro has been strong all year. It has benefited from expectations that the European Central Bank will follow up this month’s first interest rate rise in nearly three years with more increases in the months ahead.
The Australian dollar was also in the spotlight, as investors sought out its higher yields. Australia’s benchmark interest rate is much higher than the US, giving investors better returns, and it is likely to be increased further if world growth gains momentum.
At one point Thursday, the Australian dollar surged to $1.0741 on Thursday — its highest level since it was floated in December 1983.
“There’s been a general rise in risk appetite, reflected not only in equities but in Asian currencies, which have strengthened as well,” said David Cohen , economist at Action Economics in Singapore.
Earlier in Asia, Japan’s Nikkei 225 index closed up 0.8 percent to 9,685.77 while South Korea’s Kospi index rose 1.3 percent to 2,198.54. Hong Kong’s Hang Seng ended 1 percent higher to 24,138.31, and mainland China’s Shanghai Composite Index rose 0.7 percent to 3,026.67.
In the oil markets, the focus remained on the fighting in Libya. Oil prices have increased 20 percent since the beginning of the year as investors anticipated rising global demand while unrest in North Africa and the Middle East threatened oil fields and shipping lanes vital to world supply.
Benchmark crude for June delivery was down 13 cents at $111.32 a barrel on the New York Mercantile Exchange. The contract rose $3.17 to settle at $111.45 on the Nymex on Wednesday.
