Global Stock Markets Rise for the Third Consecutive Week

Last week, global stock prices rose for the third consecutive week, thanks to strong quarterly business results from companies and expectations that the U.S. central bank will soon further ease monetary policy.

On Wall Street, the Dow Jones index strengthened by 0.6 percent last week, reaching 11,132 points, while the S&P 500 also rose by the same percentage, reaching 1,183 points. The Nasdaq index increased by 0.4 percent, reaching 2,479 points. The rise in the indices is primarily attributed to better-than-expected quarterly business results from a number of companies.

Boeing, McDonald’s, Apple, Amazon.com, and IBM are just some of the American corporate giants that reported higher earnings than anticipated in the third quarter.

"Companies continue to demonstrate that they can perform well despite the slowing economic growth, and they are doing very well in that regard," says Paul Zemsky, director at ING.

The banks did not disappoint either. Goldman Sachs, Citigroup, and Wells Fargo achieved surprisingly good results in the last quarter, while only Morgan Stanley disappointed with an unexpected loss. Despite better-than-expected quarterly business results, shares of the largest American bank – Bank of America – were under pressure. Over the past 7 days, the price of that stock fell by nearly 16 percent.

This is a consequence of news that PIMCO and BlackRock funds, along with the New York Fed branch, are asking Bank of America to buy back approximately $47 billion worth of bonds linked to bad mortgage loans that were once issued by its subsidiary Countrywide Financial.

On the other hand, the so-called ‘Beige Book’ from the Fed positively influenced the market, in which the U.S. central bank indicates that the economy has been growing slowly in recent weeks, with weak inflationary pressures, while employers are holding back on hiring and investments. This has solidified the belief that the Fed will soon introduce additional quantitative easing measures to stimulate economic growth.

European stock prices also rose last week. The London FTSE index strengthened by 0.66 percent, reaching 5,741 points, while the Frankfurt DAX jumped 1.74 percent to 6,605 points, and the Paris CAC rose 1.07 percent to 3,868 points. On the Tokyo Stock Exchange, however, the Nikkei index fell by 0.78 percent last week, reaching 9,426 points. (H)