World stocks rally on earnings

Upbeat earnings and outlooks from companies including chipmaker Intel lifted global stocks and fuelled risk appetite yesterday, driving commodities higher and the Australian dollar to a post-float high. Solid corporate earnings in the US and Europe bolstered optimism about the economy and offset concerns of sovereign debt problems on both sides of the Atlantic after Standard & Poor\'s on Monday downwardly revised its outlook for the United States\' prized AAA credit rating.\"It seemed like the earnings season got off to a bit of a shaky start, but now companies are coming through with very strong results, by and large,\" said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. Steady improvement \"This really shows that corporations are delivering strong results and benefiting from the slow but steady economic improvement.\" World equities measured by MSCI All-Country World Index advanced 2 per cent, extending the previous session\'s 0.5 per cent rise and further recovering from Monday\'s 1.6 per cent loss. Intel posted higher than expected sales and forecast quarterly revenues well above Wall Street\'s estimates, while the world\'s biggest cosmetics group, L\'Oreal, and carmaker PSA Peugeot Citroen also came in with robust figures. Major US stock indexes soared. The Dow Jones industrial average was up 184.90 points, or 1.51 per cent, at 12,452.29. The Standard & Poor\'s 500 Index was up 18.16 points, or 1.38 per cent, at 1,330.78. The Nasdaq Composite Index was up 55.91 points, or 2.04 per cent, at 2,801.08. Japan\'s Nikkei average rose 1.8 per cent, snapping a three-day losing run, and the pan-European FTSEurofirst 300 rose 1.8 per cent. Emerging market stocks climbed 2.4 per cent. were cautious on US equities, keeping short positions on the S&P 500 and the Russell 2000, though they were net long on Japanese equities. An increase in risk sentiment, along with a well-received bond auction from Spain boosted the euro to its highest in 15 months against the US dollar. The euro rose 1.2 per cent versus the dollar to $1.4515 (Dh5.3305), pulling further away from this week\'s low of around $1.4155. Traders said stop-losses were triggered through last week\'s high of $1.4521 and on the break of $1.4530. Yields on ten-year Spanish government bonds fell 3 basis points to 5.47 per cent after Spain saw solid demand for ten- and 13-year bonds at an auction, though speculation of debt restructuring by Greece forced Madrid to pay higher yields than a month ago to attract investors. Driving expectations \"Investor focus is on the earnings season in the US and this is key in driving growth expectations and pushing stock markets higher. This keeps focus away from the Eurozone periphery right now,\" said Manuel Oliveri, currency strategist at UBS in Zurich. Higher-yielding currencies such as the Australian dollar rose 1.5 per cent at $1.0678 after hitting a post-float high of $1.0692. Against a basket of currencies, the US dollar fell 0.7 per cent to 74.370. The soft dollar boosted commodities, with copper up 2 per cent and Brent crude 1.1 per cent to above $122 a barrel, recovering from a 1.7 per cent drop in the previous two sessions.