European, US markets up after US jobless data

LONDON – European stocks extended gains yesterday as Wall Street opened higher after JP Morgan Chase & Co. became the latest bank to report better than anticipated earnings and US statistics showed the rise in unemployment may be moderating.

In Europe, the FTSE 100 index of leading British shares was up 64,11 points, or 1,6 per cent, at 4 032,51 while Germany’s DAX rose 68,43 points, or 1,5 per cent, at 4 618,22. The CAC-40 in France was 59,52 points, or two per cent, higher at 3 045,26.
Gains in Europe were extended after Wall Street opened slightly higher following the news that JP Morgan reported a US$2,1 billion first quarter profit – down less than expected from last year’s US$2,9 billion – and earnings per share of 40 cents, well above analysts’ expectations of 32 cents.
Though JP Morgan failed to give any indication as to when it planned to pay back the US$25 billion it got from the government through the Troubled Asset Relief Programme, its earnings added to the weight of evidence suggesting that the US banking sector may be stabilising. In recent days Wells Fargo & Co. and Goldman Sachs Group Inc. also reported profits above analysts’ forecasts.
Further optimism was stoked with the news that the number of new jobless claims in the US fell to 610 000 last week from the previous week’s upwardly revised 663 000.
Though Howard Wheeldon, senior strategist at BGC Partners, said this was ‘no time for euphoria’ he said the downward trend on claims could be ‘hugely important for market sentiment’ over the coming weeks.
‘Markets will no doubt take the news as another positive step but with the pattern of economic data remaining mixed and still biased toward the downside it would be too early in my view to suggest that equity market reaction will be suggestive of anything other than continuation of this bear market rally,’ said Wheeldon.
The jobless data, together with JP Morgan’s profits, helped offset disappointment surrounding the news that General Growth Properties Inc., the second-largest US mall operator, filed for Chapter 11 bankruptcy protection after being unable to persuade debt holders to give it more time to refinance its debt.
As a result, Wall Street opened unexpectedly higher – futures markets had earlier been predicting a drop.
The Dow Jones industrial average was up 15,21 points, or 0,2 per cent, at 8 044,31 while the broader Standard & Poor’s 500 rose 1,71 point, or 0,2 per cent, to 853,77.
Earlier, markets in Europe and Asia had been subdued as relief over China’s economic growth was offset by weaker US economic statistics from earlier this week.
While China said its annual growth slowed to 6,1 per cent in the first quarter from 6,8 percent in the previous quarter, there had been some fears that the downturn would have been more severe.
Though the world’s third largest economy continues to be a key driver for the global economy, some recent optimism surrounding the largest economy, the US, appears to have dissipated amid some downbeat economic news. Recent figures have shown that US retail sales and industrial production remain under pressure.
Hopes that an improvement in the global economy may emerge soon had enticed some investors back into stock markets in recent weeks. The rise in risk appetite has gained momentum over the last month or so as global equities have rallied from multi-year lows to post their biggest gains in such a short space of time since 1933.
That improved sentiment appears to have dried up this week following the Easter holiday. Stock markets usually start rallying around 6-9 months before real evidence of an economic recovery emerges, analysts say.
-Nampa-AP