World stocks approached a 9-month high on Tuesday while emerging stocks hit a 2009 peak as investors anticipated upward surprises from earnings results due later given a run of strong reports over the past week.
On Wall Street on Monday, the S&P 500 index hit an eight-month closing high after troubled lender CIT
Ahead of a twice-yearly testimony to Congress later in the day, Federal Reserve chairman Ben Bernanke reassured that loose monetary policy with near-zero interest rates would be around for a while longer in an article in the Wall Street Journal.
With general improvement in risk appetite, investors are looking to more corporate earnings results from firms including Volvo
The general sense as results season is upon us is that there will be fewer negative surprises than in 2008... it will be comfortable which is helping increase risk appetite, said Jeremy Batstone Carr, equity strategist at Charles Stanley. MSCI world equity index <.MIWD00000PUS> rose 0.4 percent to levels, approaching the high set last month, which was a level last seen in October.
The FTSEurofirst 300 index <.FTEU3> rose a quarter percent. British supermarket group Morrison
Emerging stocks <.MSCIEF> hit their highest since late September -- levels last seen after Lehman Brothers went bankrupt.
According to Thomson Reuters data, the second-quarter earnings growth rate for the S&P 500 improved to -35.2 percent as of end last week from -35.7 percent, thanks largely to better-than-expected earnings from companies in the financial sector.
However, all sectors in the S&P 500 are expecting a year-over-year decline in earnings with the materials, energy, financials and industrials anticipating the lowest earnings growth rates for the quarter.
U.S. crude oil fell a quarter percent to $63.83 a barrel.
The September bund futures rose 18 ticks.
The dollar <.DXY> recovered slightly from a seven-week low against a basket of major currencies while the euro fell 0.2 percent to $1.4200 after hitting a six-week high on Monday.
Bernanke will start his twice-yearly testimony on the economic outlook and monetary policy before the House Financial Services Committee at 1400 GMT. Analysts say Bernanke was likely to make clear again that there is no rush to tighten.
Whilst there are obvious signs that the economic data is improving or at least showing signs of bottoming out, recent rhetoric from the Fed has remained dovish, Calyon said in a note to clients.
The economic contraction may be slowing, and the eventual need to boost inventories should spur production, but consumption looks set to be constrained by rising unemployment. Hence, Bernanke should reiterate that the slack in the economy will keep the inflation outlook subdued.