European stock markets were up yesterday as Wall Street pushed back into record territory following strong earnings from several blue-chip companies, including Caterpillar and McDonald’s, traders said. Investors took heart after US industrial giant Caterpillar lifted its profit outlook after a big jump in third-quarter earnings. McDonald’s also jumped after reporting that third-quarter profits rose by nearly 50%. Other major companies are similarly scheduled to publish their earnings later this week.
“Global equities are trading higher into the afternoon as investors await key trading updates” from major Dow Jones listed companies, said Accendo Markets analyst, Henry Croft. In the eurozone, business activity across the single currency area slowed in October, a key survey showed Tuesday, but job creation hit the fastest pace in a decade as the economic recovery in Europe stayed on track. A purchasing managers’ index (PMI) compiled by Markit dipped to 55.9 in October after 56.7 in September, the group said in a statement.
“The euro-zone PMI surprised on the downside in October…but underlying data should encourage (the) ECB,” said ING bank economist, Bert Colijn. “While the drop…could point to a somewhat slower (eurozone) GDP growth in the last quarter of the year, it does seem that growth will remain healthy and that the economy could weather slower asset purchases by the ECB,” he said in a note to clients. Traders were looking ahead to today, when the European Central Bank is set to announce a big reduction in its financial stimulus support for a recovering euro-zone economy.
The ECB began buying massive amounts of bonds in 2015 to fight the threat of deflation — a damaging downward spiral of prices and activity. Since then, the state of the euro-zone economy has improved, and the ECB yesterday said that households across the single currency bloc enjoyed easier access to credit in the third quarter of 2017. The ECB closely watches lending data to gauge the effectiveness of its ultra-loose monetary policy, which aims to bolster growth and inflation in the single currency area by encouraging spending and investment.
Earlier, Tokyo’s Nikkei led another broad advance across Asian markets, with the index chalking up its 16th straight gain to extend an impressive record streak. The Japanese market pushed to fresh 21-year highs on the back of a weaker yen and hopes that Prime Minister Shinzo Abe’s weekend election landslide victory will usher in further measures to boost the world’s number three economy. In London, the FTSE 100 ended flat at 7,526.54 points; Frankfurt — DAX 30 closed up 0.1% at 13,013.19 points and Paris — CAC 40 rose 0.2% at 5,394.80 points yesterday.