RTTNews - European stocks are likely to extend their winning streak on Wednesday, as robust earnings from Apple further strengthened investor optimism about a recovery in the world economy. Aided by unexpectedly strong sales of Macintosh computers and a surge in iPhone purchases, Apple recorded its best non-holiday quarter ever. That said, some profit taking following a 7-day rally may cause some volatility and restrict big gains.
The U.K economy will continue to contract until the fourth quarter of this year, a report by the National Institute of Economic and Social Research or NIESR said. The institute expects the GDP to drop 0.4% in the second quarter and 0.1% in the third quarter. However, it expects the GDP to rise 0.5% in the fourth quarter.
For the whole year, the think-tank expects the gross domestic product to drop 4.3% followed by a 1% expansion next year and a 1.8% rise in 2011. The country's statistical office will release the preliminary GDP figures on July 24.
Bank of England's minutes and German Ifo business confidence survey are among the major economic reports scheduled to be released in Europe today.
In its MPC meeting held on July 8 and 9, the central bank had retained its key interest rate at historic low and decided to continue with its asset purchase scheme totaling GBP 125 billion by utilizing central bank reserves. German business sentiment is forecast to rise to 86.5 in July from 85.9 in June.
With no negative news flow to hurt sentiment, Asian stocks rose on Wednesday on hopes of a global economic revival. The mood remained cautiously optimistic following a firm close on Wall Street Tuesday, where some better-than-expected results from Merck, United Technologies and Coca-Cola and encouraging earnings guidance from Caterpillar triggered another impressive round of buying. On Tuesday, the Dow Jones Industrial Average advanced 0.77%, the Nasdaq Composite rose 0.36% and the S&P 500 index added 0.36%.
Testifying before the House Financial Services Committee, the U.S. Federal Reserve Chairman Bernanke stated that the U.S. economy is showing signs of stabilization and that the stimulus pumped by authorities into the global economy late last year probably helped to avoid a collapse of the financial system. However, he cautioned that the economy is still in a fragile state, with unemployment high and consumer spending shaky.
Meanwhile, crude oil futures gained for the fifth session in a row and finished at its highest level in almost three weeks on Tuesday, as investors looked ahead to a inventory report from the U.S. Energy Administration department. Light sweet crude for August delivery expired at $64.72 a barrel, up 74 cents Tuesday. In Asian trading on Wednesday, crude oil futures for September delivery fell modestly towards $65 a barrel after a report from the American Petroleum Institute showed an increase in crude stockpiles in the world's largest economy.
In corporate news, Deutsche Bank acknowledged Tuesday that it faced a possible investigation by federal prosecutors over allegations that the company spied on on two board members and a shareholder it suspected of leaking sensitive details.
Dane-Elec Memory SA, which manufactures and distributes digital products, reported an 8.5 percent rise in its second quarter revenue and said the market continues to be difficult.
TomTom Group reported Wednesday second-quarter net result of EUR 20 million, down 61% from EUR 52 million in the year-ago quarter. Earnings per share decreased 62% to EUR 0.13 from EUR 0.34 in the year-ago quarter.
The European markets rose for the seventh day on Tuesday, reaching their highest close since early January, as mining and energy stocks rallied on the back of higher copper and crude oil prices. The FTSEurofirst 300 index of pan-European blue chips closed 0.79% higher, while the narrower DJ Stoxx 50 index rose 0.55%. Around Europe, the U.K.'s FTSE 100 index rose 0.85%, France's CAC 40 index advanced 0.98% and Germany's DAX index moved up 1.27%.
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