The major markets across Europe are set to open higher on Thursday, following positive cues from Wall Street, where the major indices arrested a two-day decline and ended in positive territory amid choppy trading on optimism that the global recovery will be on course despite poor corporate earnings for the first quarter of 2009. A deal announced in the housing sector and positive reaction to a speculation over the U.S. Treasury extending the TARP funding to the insurance sector helped the U.S. markets overlook the still-fluid economic conditions.
Asian markets are trading in positive territory on expectations that the government of the second largest economy in the world, Japan, is all set to announce another stimulus package worth US$150 billion to revive the economy. Unexpected positive data on machinery orders also lifted sentiment, with the benchmark Nikkei 225 Average gaining more than 3.5%. The Bank of Korea has left the 7-day repo rates unchanged at 2%, stating that the fall in the economic activity has moderated of late.
On Wednesday, the Dow closed up 47.55 points or 0.6% at 7,837, the Nasdaq closed up 29.05 points or 1.9% at 1,591 and the S&P 500 closed up 9.61 points or 1.2% at 825.16.
Across Europe, the markets ended in positive territory on Wednesday as automotive stocks rallied on news of the approval of plans to raise the funds available for subsidies to German car buyers and the launch of auto supplier support programs by U.S. automakers General Motors and Chrysler.
The FTSEurofirst 300 index of pan-European blue chips closed 0.25% higher at 763 points, while the narrower DJ Stoxx 50 index rose 0.23% to 1,877 points. France's CAC 40 index rose 0.65% to 2,921 and Germany's DAX index surged up 0.82% to 4,358, while the U.K.'s FTSE 100 index fell 0.13% to 3,925.
On the economic front, market participants expect the Bank of England to hold interest rates steady at 0.5% at the conclusion of the meeting later in the day. Additionally, PPI and external trade data from UK will be released shortly at 4.30 A.M. ET. Input prices are predicted to fall 0.7% annually in March after rising 0.5% in February. Meanwhile, output prices are expected grow 2.1% compared to 3.1% in February.
In Germany, the Federal Ministry of Economics and Technology is due to issue German industrial production data for February. Economists see a 3% month-on-month decline in February following a 7.5% fall in January. On an annual basis, output is forecast to slump 21.7%.
Among corporate news, British financial services firm Barclays Plc (BCS, BARC.L) is reportedly closing in on a deal with private equity firm CVC Capital Partners Ltd. to sell its iShares unit for about 3 billion pounds or US$4.29 billion. The deal is expected to be announced as early as today or next week. Barclays will retain a 20% stake in iShares, and may lend CVC two-thirds, or as much as 70% of the purchase price.
Automotive stocks will witness further action following an announcement by the US Treasury Department that automakers GM and Chrysler have launched auto supplier support programs backed by up to $5 billion in U.S. government funds. The programs will guarantee receivables owed to the auto parts suppliers for any good shipped after March 19. Chrysler is also reported to be in consultations with workers to arrive at a new labor agreement, and also with lenders to reduce the debt.
Leighton Holdings Ltd. (LEI.AX, LGTHF.PK) in a joint venture with Macmahon Holdings Ltd. (MCHHF.PK, MAH.AX) received rail contract for more than A$500 million from BHP Billiton Ltd. (BHP, BBL, BLT.L). This contract is to develop BHP Billiton Iron Ore's Rapid Growth Project 5 rail project in Western Australia. As part of the contract, BHP Billiton Iron ore will supply additional A$150 million of materials to the project which the joint venture will handle as part of the works.
Autonomy Corp. Plc (AU.L) in its trading update said it expects to report record first quarter 2009 results, with revenues ahead of consensus estimates. The company expects revenues in between US$128 million and US$130 million, versus analyst consensus revenue estimates of US$126 million. Adjusted earnings per share are expected to be significantly ahead of analyst consensus estimates of 15 cents.
Norman Hay Plc (HNN.L) reported fiscal 2008 profit of GBP 1.55 million, lower than GBP 1.67 million in the previous year. The company recorded profit attributable to equity holders of GBP 1.56 million or 10.4 pence per share, compared to GBP 1.64 million or 10.9 pence per share last year.
Vane Minerals Plc (VML.L) reported a loss attributable to equity holders of GBP 1.73 million or 0.91 pence per share for the year ended 31 December 2008, , compared to a loss of GBP 7.06 million or 4.58 pence per share last year. The company further noted that the directors do not recommend a dividend for the year.
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