For the first time in four days, the world stocks rose on Tuesday and the weaker dollar resulted to a gain in oil prices, as investors set their expectations for monetary policy meetings in Japan and the United States.
European stocks have also benefited from the less than expected 80% fall of the first quarter profits and the unchanged dividend from BP. They also encouraged results from UPM.
Quarterly Earnings Report
Since it is the season for reporting quarterly earnings, investors are waiting for updates from the biggest company in the world, Apple (AAPL.O). The pan-European FTSEurofirst 300 .FTEU4 stock index rose about half percent. Meanwhile, Britain’s FTSE 100 increased by 0.4 percent .FTSE.
These gains have aided the world equity index of MSCI .MIWD00000PUS, which monitors stocks in 45 countries, increase by 0.1 percent after 3 consecutive days of losing, taking it back to an almost-five-month high last week.
“European equity markets are trading moderately higher on positive corporate earnings surprises from several companies,” said Markus Huber, the trader from the City of London Markets.
Before the two-day meeting of the Federal Reserve on Tuesday, Markus Huber said, “many traders are at least temporarily moving their overall exposure to more neutral from previous negative, consequently closing some of their short positions.”
Markets don’t predict chances of the US interest rate to increase and are expecting a 20 percent chance of a move during the next meeting on June 14-15. A surprise drop in the home sales data of the US for March has shown evidence of anemic growth of the US economy.
Nonetheless, officials from the Federal Reserve said that there might be a hike in June.
“Even dovish policy makers such as (Boston Fed President Eric) Rosengren are saying market expectations are too low,” said Tomoaki Shishido, a fixed income strategist at Nomura Securities in Tokyo. “So the Fed may try to urge markets to price in higher rates. On balance, we are more likely to have a hawkish surprise than a dovish surprise.”