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Strong US earnings reports boost world markets ahead of Fed policy statement
LONDON (AP) ' Global stocks rose Wednesday after earnings from Apple Inc. and other U.S. companies easily beat expectations, providing a distraction from the economic and political turbulence in Europe over its debt crisis.
Apple again proved skeptics wrong by reporting blowout iPhone sales. The world's most valuable company sold 35 million iPhones in January through March, nearly twice as many as in the same period a year earlier. By beating expectations on iPhone sales, Apple comfortably beat analysts' earnings and revenue forecasts.
"Whilst Apple might not be a bellwether for economic activity generally it is probably fair to say that it is an important confidence indicator for the market as a whole, so these figures will help sentiment today," said Gary Jenkins, managing director at Swordfish Research.
In Europe, Germany's DAX was up 1.3 percent at 6,676 while the CAC-40 in France rose 1.7 percent to 3,222. The euro was also buoyed, trading 0.1 percent higher at $1.3215.
European earnings statements were less upbeat ' though Electrolux and LM Ericsson posted strong gains, Peugeot Citroen reported a sharp drop in sales in Europe and Credit Suisse profits fell.
The FTSE 100 index of leading British shares underperformed after figures showed the U.K. economy unexpectedly shrank 0.2 percent in the first quarter of the year, putting it back in recession ' it was up only 0.3 percent at 5,725.
Wall Street was poised for gains on the open, with Dow futures up 0.5 percent at 13,027 and the broader S&P 500 futures up 0.7 percent at 1,380.
Despite the cheer provided by Apple, as well as companies like AT&T, markets are likely to remain nervous over developments in Europe's debt crisis.
Though a Dutch bond auction on Tuesday helped soothe market fears, investors remain edgy about how the crisis will develop over the coming weeks with general elections taking place in Greece and France. The Netherlands is also expected to go to the polls later in the year after its government collapsed on Monday over a failure to agree on an austerity package.
Later Wednesday, the focus is likely to shift to the latest policy statement from the Federal Reserve, which could well prompt traders to revise their expectations of how long U.S. borrowing costs will remain at their super-low level.
"There is risk that the Fed's economic projections will appear more optimistic than those in January," said Jane Foley, an analyst at Rabobank International.
Earlier in Asia, Japan's Nikkei 225 rose 1 percent to close at 9,561.01, but South Korea's Kospi fell marginally to 1,961.98.
Hong Kong's Hang Seng fell 0.2 percent to 20,646.29 and the Shanghai Composite Index rose 0.8 percent to 2,406.81.
Oil prices tracked equities higher, with benchmark oil for June delivery up 58 cents at $104.13 a barrel in electronic trading on the New York Mercantile Exchange.
Pamela Sampson in Bangkok contributed to this story.