Strong US profits boost shares on both sides of the Atlantic
Stock markets surged again on both sides of the Atlantic as traders continued to seize on good news and ignore signs of lingering fragility.
Stock markets surged again on both sides of the Atlantic as traders continued to seize on good news and ignore signs of lingering fragility.
Equities in the US added almost 3 per cent, wiping out Wednesday's falls and maintaining last week's rebound. Yesterday's rush to buy was triggered by an upbeat outlook from IBM, the computer giant. Its shares leapt 11 per cent after exceeding Wall Street estimates for its third quarter and standing by its targets for the final quarter of the year. Eastman Kodak, the film giant, jumped 7 per cent after it said quarterly earnings would beat expectations.
The two companies are the latest in a line of household American names to report trading in line with, or better than forecasts. Only Intel, the computer chip maker, has disappointed in recent days.
Further excitement was added after the market closed with Microsoft reporting that profits had more than doubled from a year ago as a controversial software licensing plan helped drive sales. For the three months ended 30 September, the software maker made a profit of $2.73bn, compared with $1.28bn for the same period a year ago, surpassing Wall Street's expectations.
The mood was also buoyed by government figures showing that new housebuilding projects had hit a 16-year high in the US as builders cashed in on the property boom. Ground breaking for new homes jumped 13.3 per cent to 1.843 million units last month – the highest since June 1986.
"Housing starts are extremely strong, just through the roof," said Sean Callow, a foreign exchange analyst for IDEAglobal. "They are not consistent with fears of a double-dip recession."
On Wall Street the news triggered a surge on the Dow Jones index, which closed 239 points, or 3 per cent, higher at 8,275.04. In London the FTSE 100 closed up 2.8 per cent at 4,171.
Traders largely ignored a fall in September industrial production and a plunge in the Philadelphia Federal Reserve's manufacturing survey that pointed to more gloom for industry ahead.
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