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Shares Rise Amid Strong Corporate Earnings -- Update

19 Jul 2017 9:13 am
By Riva Gold and Ese Erheriene 
   -- Stocks in Europe and Asia climb 
   -- Dollar steadies after bruising session 
   -- Earnings from Morgan Stanley, Alcoa in focus 

Global stocks rose Wednesday, supported by a bounce in the technology sector and better-than-expected corporate results.

Futures pointed to a small opening advance on Wall Street with reports due from Morgan Stanley, American Express Co. and Alcoa Corp. The Stoxx Europe 600 edged up 0.3% in morning trading after its biggest daily decline this month, tracking gains across Asian markets.

Technology companies were among the best performers after double-digit gains in Netflix Inc. shares post-earnings helped send the Nasdaq Composite to its first record close in six weeks.

"We've seen quite a strong earnings period, not just in the U.S. but in Europe and emerging markets," said Mouhammed Choukeir, chief investment officer at Kleinwort Hambros.

The second-quarter earnings season may be weaker than the first, but it is still a positive trajectory, with revenues increasing as a result of a stronger economy, he said.

On Wednesday, corporate results drove steep swings in individual stocks in Europe. Shares of Swedish household-appliance maker Electrolux AB were up 4.3% after it posted a 21% rise in net profit, while semiconductor-equipment maker ASML Holding was up around 3.9% after it offered an upbeat projection for sales growth.

Sweden's lockmaker Assa Abloy AB and truck maker Volvo AB fell 8.5% and 6.1% respectively after reporting, however, mitigating gains elsewhere.

The upbeat tone in Europe also came as the euro paused its rally a day before the European Central Bank's closely watched meeting and press conference with President Mario Draghi. The euro was down 0.3% at $1.1525 after settling at its highest since August 2015, while German bund yields edged down to 0.545% from 0.558%. Yields move inversely to prices.

"Draghi has been a wild card in the market," said JJ Kinahan, chief market strategist at TD Ameritrade. "People are really watching to see if he strikes a more dovish tone."

The dollar, which fell to its lowest close since October on Tuesday following the failure of Senate Republicans to replace the Affordable Care Act, was last up 0.1% against a basket of 16 currencies.

"The market's patience in the U.S. government is truly being tested," analysts at ANZ Research said. "The failure of Congress to vote to repeal and replace Obamacare puts tax reform and fiscal expenditure plans at risk."

Earlier, stocks were broadly higher in Asia-Pacific trading hours, with Australian stocks leading the way on strong gains among the country's biggest banks.

Australia's S&P/ASX 200 was up 0.8%, as shares of the country's "big four" banks all rose 3% or more. Australian regulators raised capital requirements for banks, but set a deadline of 2020 to reach those targets, easing near-term fears of capital raising that could dilute current shares.

Asian tech stocks continued to move higher, supported by the Nasdaq Composite's climb. Lens maker Largan jumped 2.4% and Tencent rose 3.9% as both hit new peaks, driving a 0.2% rise in Taiwan's Taiex and a 0.6% rise in Hong Kong's Heng Seng.

The Shanghai Composite Index rose 1.4% while the Shenzhen Composite rose 1.9%, recovering from a rough start to the week.

Japan's Nikkei Stock Average added 0.1% as investors were cautious ahead of a policy statement from the Bank of Japan later on Thursday.

Demi Guo contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

July 19, 2017 05:13 ET (09:13 GMT)

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