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US stock markets climb, European stocks expected up

28 January 2010 09:50 (UTC +04:00)

BakÄ±. Vahab Rzayev - APA-Economics. European stocks are expected to open higher Thursday, finding cheer in a stronger close on Wall Street after the Federal Reserve elected to keep its policy rate near zero, even though continuing fears for some of the euro-zone’s weaker economies have hit the euro hard. WSJ reported.
"Yesterday’s somewhat more upbeat assessment of the U.S. economy than had been expected by the Fed helped kick start something of a rebound on Wall Street in the last couple of hours’ trade," said Ben Potter, research analyst at IG Markets.
"This has already delivered support across Asia and looks set to offer some cheer in Europe too," he said.
Potter called London’s FTSE 100 index to open up 55 points, or 1.1%, at 5273.0, Frankfurt’s DAX up 66 points, or 1.2%, at 5709.0, and Paris’s CAC-40 51 points higher, or up 1.4%, at 3812.0.
Potter also noted though that after a mostly downbeat week in Europe, with many of the main indexes hitting new intraday lows for 2010, many investors will be looking to pick up a few ’bargains’ in equity markets.
Meanwhile, Asian stock markets were broadly higher Thursday following the modest rise on Wall Street.
Although the Fed left interest rates unchanged, "the Fed’s tone over employment and investment was more positive than before, raising expectations for a recovery in consumer spending," said Jung Seung-jae at Mirae Asset Securities in Seoul.
President Obama’s State of the Union address, which was also watched closely by some investors after his recent proposals to tax some banks and limit their size and risk, had little impact on trading.
Hong Kong’s Hang Seng index was 1.2% higher but China’s Shanghai Composite was down a tad, 0.1% lower. Japan’s Nikkei 225 was up 1.6%, South Korea’s Kospi Composite was up 1.0% and Australia’s S&P/ASX 200 rose 0.6%.
U.S. stocks rose Wednesday as the Federal Reserve kept interest rates near zero, Boeing reported a bigger-than-expected fourth-quarter profit, and Apple introduced its highly anticipated ’tablet’. However, a forecast from Caterpillar weighed, keeping the gains in check.
The Dow Jones Industrial Average climbed 0.4% to 10,236.2, marking its biggest one-day gain since January 19. The technology-heavy Nasdaq Composite climbed 0.8% to 2221.4. The Standard & Poor’s 500 rose 0.5% to 1097.5.
In the foreign exchanges, the euro fell to a six-month low against the dollar, largely on worries about some European countries’ fiscal health, which prompted investors to move out of the single currency.
Greece’s ability to repay its debts was at the forefront of investors’ minds, alongside nervousness about Portugal, which said earlier this week that its 2009 budget deficit was equivalent to 9.3% of its gross domestic product.
At 0725 GMT, the euro was trading at $1.4010, down from $1.4025 late Wednesday in New York, after touching a low of $1.3930, the euro’s weakest level since July 14 last year. The dollar was trading at Y90.38, up from Y90.01.
Meanwhile, spot gold was higher despite the dollar’s strength, trading at $1088.90 per troy ounce, up $1.50 from the New York close. Nymex March crude oil futures were also higher, up 19 cents at $73.86 per barrel.
However, the rebound in equities weighed on European government bonds, with the March bund futures contract down 0.34 at 123.04. DOW JONES NEWSWIRES