U.S. set to rise; European markets mostly higher after sell-off in Asia
NEW YORK: U.S. stocks were expected to rise at the opening Wednesday, after Asian markets fell heavily. European stocks were mostly higher.
U.S. investors were cheered by better-than-expected profit results from Walt Disney. Disney posted a 26 percent decline in profit late Tuesday, but the results beat expectations. The company - one of the 30 companies that make up the Dow Jones industrials - reported a 9 percent rise in revenue, thanks in part to the success of brands such as ESPN, “High School Musical” and “Hannah Montana.”
Disney shares rose more than 5 percent in premarket trading.
Earlier Wednesday, the benchmark Nikkei 225 stock average in Tokyo fell 4.7 percent, and the Hong Kong benchmark Hang Seng fell 5.4 percent, amid persistent concerns about global banks.
Dow futures rose 35, or 0.28 percent, to 12,355. Standard Poors 500 index futures rose 5.80, or 0.43 percent, to 1,349.00, and Nasdaq 100 index futures rose 4.50, or 0.25 percent, to 1,789.50.
European markets were mixed. The pan-European DJ Stoxx 50 index was up 1 percent in afternoon trading, while the FTSE 100 in London was down 0.1 percent. The CAC 40 in Paris was up 0.6 percent, and the DAX in Frankfurt was up 0.8 percent.
European sentiment was aided by fresh merger and acquisition speculation in banking and mining sectors and some surprisingly upbeat earnings from non-financial firms.
Sociйtй Gйnйrale, hit by a massive trading scandal last month, jumped as much as 7.8 percent as traders speculated about a potential bid by HSBC Holdings ahead of Sociйtй Gйnйrales planned capital increase. HSBC declined to comment.
Expectations of a bid for the Swiss mining company Xstrata from Brazils Vale also stoked the hopes for deal activity.
France Tйlйcom, meantime, reported an above-forecast 3.1 percent rise in earnings last year and raised cash flow expectations for 2008.
Concern about further write-downs of loans and debts sent Credit Suisse down 4.1 percent, UBS down 3.1 percent and Royal Bank of Scotland down 2.6 percent.
However, hopes for an interest rate cut from the Bank of England on Thursday and growing talk that the European Central Bank will start to signal more concern about slowing growth helped partly offset the deep gloom over bank outlooks.
Wall Street stocks plummeted Tuesday, sending the Dow down 370 points after the Institute for Supply Management reported a surprising January contraction in the U.S. service sector - news that bolstered the argument that the nation is in recession. The Dows nearly 3 percent drop was the widest percentage drop since Feb. 27, 2007.
Renewed anxiety about the world economy was triggered on Tuesday by surveys showing service sectors in the United States, Germany, Italy and Spain all contracted in January.
Financial shares such as Mitsubishi UFJ Financial Group were among the biggest losers in Asia after Standard Poors on Tuesday warned the ratings of U.S. banks could be at risk should bond insurers be downgraded. But trade was thinner than usual with markets in South Korea, Taiwan, and China closed on Wednesday for the rest of the week in what has been a less than festive start to the Lunar New Year holidays.
“The market is being hit by U.S. recession fears,” said Yoshihiro Ito at Okasan Capital Management in Tokyo. “The impact of subprime problems is spreading into the broader U.S. economy.”
Gold bounced after falling to its lowest level in almost two weeks on Tuesday, with spot prices at $893.15/85 an ounce.
