World stocks holding steady ahead of U.S. earnings
LONDON -- European stocks and Wall Street futures loitered around 2009 highs Tuesday as investors awaited a raft of third-quarter earnings statements later in the week.
In Europe, Britain's FTSE 100 index of leading shares was up 5.6 points, or 0.1 percent, at 5,215.77 while Germany's DAX fell 9.54 points, or 0.2 percent, to 5,773.69. The CAC-40 in France was down 2.85 points, or 0.1 percent, at 3,842.95.
In the U.S., stocks were expected to open largely flat. Dow futures were up 17 points, or 0.2 percent, at 9,836 while the broader Standard & Poor's 500 futures rose 2.2 points, or 0.2 percent, at 1,073.70.
With a quiet day in store on both the corporate and economic calendars, Philip Gillett, a sales trader at IG Index, said results from U.S. healthcare company Johnson & Johnson will likely influence early sentiment in the U.S.
Johnson & Johnson reported a 1 percent increase in third-quarter profit and beat Wall Street expectations. It also raised its earnings guidance for the year.
Investors around the world will be closely monitoring the earnings statements, which kick up a gear after the U.S. markets close, notably with results from Intel Corp., the world's largest chipmaker. Intel has been seen as a bellwether over recent months of the health of the U.S. economy.
Major U.S. financial institutions such as Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc. and JP Morgan Chase & Co. will also take center stage come Wednesday.
The financial sector, which led the market down at the outset of the crisis, generally outperformed other sectors, leading the market on the way up since March's lows. In particular, investors will be looking to see how much companies have been able to drive up earnings by generating revenues as opposed to cutting costs.
"Expectations are running high," said David Buik, markets analyst at BGC Partners.
Stocks around the world have rallied since March on hopes that the global economic recovery will be faster than anticipated -- many of the world's major indexes are now trading at year highs.
Investors will also be keeping a close eye on the minutes to the U.S. Federal Reserve's last policy meeting in September, to be released Tuesday afternoon New York time. At that meeting, the Fed kept interest rates at a record low of near zero and downplayed the threat of inflation.
Neil Mackinnon, global macro strategist at VTB Capital in London, said developments at the Fed will be key in the performance of stocks over the coming months, as he argues that the massive liquidity measures undertaken by the central bank have been the main reason underpinning the rally over recent months.
"For as long as the Fed keeps the liquidity taps open then the market rally can continue though, ironically, better economic data only increases the probability that the Fed withdraws liquidity which then leaves equities with reduced support," said Mackinnon.
Earlier, European markets largely brushed aside the news that inflation in Britain fell to a five-year low of 1.1 percent in the year to September and a surprise fall in German investor sentiment -- the ZEW institute reported that its main index fell to 56 from 57.7 -- the first monthly drop in a year.
Most Asian stock markets had advanced in response to the previous day's gains in Europe and the U.S. Japan's Nikkei 225 stock average added 60.17 points, or 0.6 percent, to 10,076.56, while Hong Kong's Hang Seng rose 168.01 points, or 0.8 percent, to 21,467.36.
Shanghai's benchmark was up 1.4 percent, Australia's index gained 1 percent and Indonesia's market was higher by 0.3 percent. South Korea's Kospi lost 0.7 percent and Taiwan's market traded flat. Singapore ended 0.3 percent lower.
Oil prices rose modestly, with benchmark crude for November delivery adding 95 cents to $74.22. The contract rose $1.50 overnight.
The dollar fell 0.3 percent 89.55 yen, while the euro rose 0.6 percent to $1.4865.