Stocks, U.S. Futures Rise on Earnings, Economy; Euro Advances
Oct. 21 (Bloomberg) -- U.S. index futures and stocks in Europe rose after earnings from Caterpillar Inc., EBay Inc. and Nokia Oyj beat analysts' estimates and European manufacturing grew. The euro strengthened and rice gained for an eighth day.
Standard & Poor's 500 Index futures climbed 0.5 percent at 8:10 a.m. in New York. Caterpillar added 1.5 percent and EBay rallied 6.9 percent in pre-market trading. The Stoxx Europe 600 Index rose 0.5 percent. The euro gained against all but two of its 16 most-traded peers. The pound slumped to a six-month low versus the euro. Rice futures increased 1.1 percent in Chicago.
Caterpillar raised its outlook for earnings, EBay forecast higher revenue and Nokia's sales topped estimates as 75 percent of the companies in the MSCI World Index that have reported per- share income since Oct. 7 beat estimates. European manufacturing unexpectedly grew this month, Markit Economics said today. China's economy expanded 9.6 percent in the third quarter, increasing pressure on the country to let the yuan gain as Group of 20 officials prepared to meet in Seoul tomorrow to discuss currencies.
"Generally the numbers are surprising positively and are being taken well by the market," said London-based Andrea Williams, who helps manage about $1.1 billion at Royal London Asset Management.
The gain in U.S. futures indicated the S&P 500 may rise for a second day. The benchmark gauge rose 1.1 percent yesterday after the Federal Reserve said in its Beige Book business survey that the economy grew at a "modest pace" in September, while results at Boeing Co. and Yahoo! Inc. surpassed estimates. Forty-six S&P 500 companies are due to report earnings today.
Caterpillar, UPS
Caterpillar, the world's largest maker of construction and mining equipment, had third-quarter earnings of $1.22 a share, exceeding the $1.09 average analyst estimate in a Bloomberg survey. United Parcel Service Inc. reported a better-than- estimated adjusted earnings of 93 cents a share and raised the full-year outlook.
The Conference Board's gauge of the outlook for the next three to six months probably rose 0.3 percent, according to the median estimate of economists surveyed before a report due at 10 a.m. in New York. A separate release may show the number of Americans filing applications for jobless claims fell last week.
Three stocks rose for every one that fell in Europe's Stoxx 600. Nokia, the world's biggest maker of mobile phones, jumped 7.2 percent. Fiat SpA, Italy's largest manufacturer, gained 3.7 percent after increasing its outlook for full-year earnings. Pernod-Ricard SA, the maker of Chivas Regal whiskey and Absolut vodka, rallied 6.4 percent after reporting sales growth that beat estimates.
Danone, Credit Suisse
Danone SA, the world's largest maker of yoghurt, gained 4.1 percent after saying third-quarter sales rose 15 percent as it increased prices. Credit Suisse Group AG, Switzerland's third- largest bank, fell 2.2 percent after results missed analysts' projections.
The MSCI Emerging Markets Index rose 0.7 percent, the most in five days, while the MSCI China Index of Hong Kong-traded shares advanced 0.9 percent. Russia's Micex Index increased 2.1 percent, the most among benchmark indexes in major emerging markets, after the government said it plans to raise $59 billion through asset sales in the next five years to balance the budget. India's Bombay Stock Exchange Sensitive Index added 2 percent.
The euro rose 0.4 percent to $1.4024 and appreciated 0.3 percent to 113.67 yen. An index of euro-region manufacturing industries rose more than predicted this month, data from Markit Economics showed today.
Pound Weakens
Sterling depreciated against all 16 of its most-traded peers, falling 1 percent to 88.98 pence per euro. Chancellor of the Exchequer George Osborne said the Bank of England has freedom to use monetary-policy tools if the squeeze in fiscal policy hurts domestic demand. He also defended his deficit- cutting plan, saying to the BBC that "if we don't take this path, then economic ruin lies ahead." The pound extended declines as a report showed U.K. retail sales unexpectedly dropped in September for a second month.
The extra yield, or spread, that investors demand to hold Spanish 10-year bonds instead of similar-maturity benchmark German bunds rose six basis points to 1.68 percentage points after demand fell at a sale by the Iberian nation of 2025 bonds. Investors bid for 1.44 times the amount of Spanish securities offered, compared with a bid-to-cover ratio of 2.57 the last time the debt was sold on July 15.
Greek Bonds
The Greek-German spread widened 16 basis points to 6.77 percentage points, the most since Oct. 12, while the Portuguese- German 10-year gap increased six basis points to 3.35 percentage points. The Irish 10-year-bund spread rose six basis points to 3.93 percentage points. The yield on the German bund was little changed at 2.44 percent.
Credit-default swaps insuring Ireland's government bonds fell five basis points to 413, contracts on Portugal's debt dropped six basis points to 337, Italy decreased two basis points to 167 and Greece lost two basis points to 665, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of default swaps on 15 governments was unchanged at 139.
Rice for January delivery rose on concern that stronger demand and crop losses may curb global supply. Lead for delivery in three months gained as much as 2.4 percent to $2,508 a metric tons, the highest intraday level since January, while zinc added 2.6 percent, the most since April. Crude oil fell 0.2 percent to $82.40 a barrel in New York trading.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Paul Sillitoe in London at psillitoe@bloomberg.net
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