RTTNews - The major markets across Europe are expected to open slightly lower on Tuesday morning following a sharp rally on Wall Street, where concerns about recovery eased further on positive economic data. The much-anticipated bankruptcy filing by General Motors took place yesterday and the markets reacted positively in anticipation of some sort of stability in the sector in particular and overall economy in general, with the indices closing at the best levels for the year.
In the U.S., a slew of positive economic data lifted the market sentiment on Monday. A report released by the Institute for Supply Management showed that the ISM index of activity in manufacturing sector rose to 42.8 in May from 40.1 in April, signaling a slower pace of contraction in activity in the manufacturing sector in the month of April. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.
A report released by the Commerce Department showed that construction spending unexpectedly increased in the month of April, reflecting a notable increase in spending on private construction. In a separate report, the Commerce Department stated that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.
The Dow closed up 221.11 points or 2.6% at 8,721, the Nasdaq finished up by 54.35 points or 3.1%, at 1,829, and the S&P 500 rose 23.73 points or 2.6% to 943.
The major markets across Asia-Pacific region are trading in positive territory, on increasing optimism that the worst for the global economy might have been over and stabilization and slight recovery is on the cards.
Meanwhile, the European markets ended higher on Monday, led by higher commodity and crude oil prices, positive economic data from the U.S, manufacturing data from China and the conclusion of the much-anticipated bankruptcy filing of General Motors, raising hopes that the worst for the global economy is all but over.
The FTSEurofirst 30 index of pan-European blue chips closed 2.80% higher at 886 points, while the narrower DJ Stoxx 50 index rose 2.88% to 2,186.07 points. The U.K.'s FTSE 100 index rose 2.00% to 4,506, while France's CAC 40 index surged up 3.11% to 3,379 and Germany's DAX index climbed 4.08% to 5,143.
On the economic front, a slew of reports are due from the Bank of England at 4.30 a.m. ET. The number of mortgage approvals in the UK for the month of April is seen at 41,000, up from 39,000 in March. Meanwhile, a final report for M4 money supply is also due. Half an hour later, the Eurostat is scheduled to issue Eurozone jobless data for the month of April. The jobless rate is expected to rise to 9.1% in April from 8.9% in March.
The State Secretariat for Economic Affairs in Switzerland said that the Swiss economy contracted 0.8% sequentially in the first quarter following a revised 0.6% fall in the previous quarter. On an annual basis, real GDP dropped 2.4% in the first three months of 2009. Economists had estimated a 1.7% GDP decline following a 0.6% contraction in the previous quarter.
In corporate news, airline stocks might be in focus following news that Air France-KLM's A330 Air bus carrying 228 people lost contact with the control room and went missing enroute to Paris from Rio de Janeiro.
Automobile stocks might witness action following the bankruptcy filing by General Motors on Monday. The release of May sales later in the day might also influence trading in these stocks. Sports-car maker Porsche, in a statement, said that integrating with Volkswagen would be the best solution for all parties concerned. Auto stocks are trading in green across the markets in the Asia-Pacific region.
Centrica plc (CNA.L) might react to the news that it has reached an agreement with Canadian Superior Energy Inc. (SNG.TO) to acquire a 45% interest in gas development Block 5(c), located off the south east coast of Trinidad for US$142.5 million, or £87 million, in cash.
Pennon Group plc (PNN.L) would be in focus after reporting a sharply lower profit for the year ended 31 March 2009. Underlying earnings for the period, however, rose to £132.9 million or 38.0 pence per share, from £129.2 million or 36.7 pence per share last year. Revenue for the year was £952.9 million, up from £875 million in the prior year.
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