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RPT-GLOBAL MARKETS-Global stocks at 1-year high, bulls on parade

Published 10/20/2009, 02:44 AM
Updated 10/20/2009, 02:48 AM
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* Commodities, Apple results boost shares across the board

* Oil tops $80, gold nears record high on weak US dollar

* FX carry trade stages formidable comeback

By Kevin Plumberg

HONG KONG, Oct 20 (Reuters) - Global stocks extended gains to a one-year high on Tuesday, up 75 percent from a crisis low after strong sales numbers from Apple Inc suggested U.S. consumption is returning.

However, major European stock markets could succumb to profit taking, with financial bookmakers' expecting Britain's FTSE 100, Germany's DAX and France's CAC-40 to open either slightly higher or lower.

The weak dollar supported commodity prices, with oil briefly topping $80 a barrel for the first time in a year, up for a ninth day, and gold near a record high, as the dollar remained under pressure from investors searching for higher returns elsewhwere.

Portfolio flows into emerging market assets have been torrential, leading Brazil to slap a 2 percent tax on foreign investment in domestic stocks and bonds to try to cool its real currency, which has surged 36 percent this year. [ID:nN19264977]

In stock markets, Japan's Nikkei share average <.N225> rose 0.9 percent, supported largely by technology stocks.

"These (U.S.) results are inevitably providing a bit of a boost, particularly for parts suppliers and chip makers, while a whole range of China-linked shares are also doing well," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.

Shares of Komatsu Ltd <6301.T>, the world's second-biggest maker of construction equipment, rose 2 percent after a report the company had made 10 billion yen in operating profit for the July-September quarter on demand from China and other developing markets.

The benchmark MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.9 percent to the highest in 14 months. The materials and financial sectors led the charge. The Thomson-Reuters index of regional shares <.TRXFLDAXPU> was up 0.95 percent.

The MSCI index of global shares <.MIWD00000PUS> edged up 0.3 percent based on Asia's gains and was at the highest since Sept. 29.

U.S. stock futures rose 0.3 percent after profits at Apple Inc , released after the closing bell, exceeded market forecasts on record quarterly sales of iPhones and Macs. [ID:nN19395089]

Shares of Apple jumped 7.5 percent in after-hours trading to a record high. During the regular session, U.S. stocks gained about 1 percent to 12-month highs as investors cheered a wave of solid quarterly earnings. [.N]

BETTER EARNINGS, BETTER SENTIMENT

Investors have been anxiously waiting for the earnings season for signs that consumer demand is improving, which would reinforce the chances of a sustainable global economic recovery and give new legs to a seven-month equity rally which has been showing signs of flagging.

Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong, said in a note that the eight companies in the S&P 500 that reported results on Monday topped consensus by an average 15 percent.

The ICE Futures U.S. dollar index, a gauge of its performance against six major currencies, fell as far as 75.12 <.DXY>, its lowest since August last year.

The euro was nearly unchanged on the day at $1.4975 , meeting some selling pressure by dealers protecting positions at the round figure of $1.50.

Minutes from a Reserve Bank of Australia policy meeting earlier this month pointed to more interest rate increases ahead and said the stronger Australian dollar was a sign of improving sentiment that would help contain inflation.

"There are no warning signs for AUD bulls," said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, in a note.

The Australian dollar briefly rose above US$0.93 to the highest in 14 months before easing to $0.9280 , about even on the day.

Gold firmed on dollar weakness, climbing 0.3 percent to $1,065.50 an ounce in the spot market, just shy of a record $1,070.40 hit last week.

U.S. crude for November delivery rose 0.3 percent to $79.86 a barrel after earlier hitting $80.05 a barrel , its strongest since Oct 14, underpinned by the ailing dollar, global recovery hopes and bullishness in equity markets.

"I think we will continue higher as we move further into the fourth quarter. Investors think equity earnings are a good guide for the economic outlook so the better-than-expected reporting season is supporting," ANZ's senior commodities analyst Mark Pervan said.

(Additional reporting by Elaine Lies in TOKYO and Nick Trevethan in SINGAPORE; Editing by Tomasz Janowski)

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