Markets rise after China's stimulus measure - 21.4.2015

US stock markets ended sharply higher on Monday as investor confidence was bolstered by better than expected earnings reports and the surprise cut of the required reserve requirement by the central bank of China on Sunday. The S&P 500 closed 0.9% higher, with the technology sector leading broad-based gains. The Dow Jones Industrial Average surged 1.2% with IBM Corp and Apple Inc. leading the gains as they advanced 3.42 % and 2.28% respectively. After earnings expectations were lowered due to negative impact of stronger dollar, about 76 % of the S&P 500 companies that have reported results so far have beat analysts’ earnings expectations. That is higher than the 70 percent average in the last four quarters. But just 47 percent beat on revenue forecast, compared with the 58 percent average over the same period. Investors are cautiously optimistic ahead of the biggest earnings week of the first-quarter earnings season as 147 firms, constituting 32% of the S&P 500 list, are due to report. Major technology companies Google, Microsoft, Facebook, Qualcomm and Amazon.com also report this week. Dollar strengthened on Monday as ICE US Dollar index, a measure of the dollar’s strength against a basket of six major currencies, rose 0.44 %. No important economic data are expected today in US.

European stocks rose on Monday as market sentiment was boosted by China’s move on Sunday to stimulate the economy by freeing $200 billion in reserves for additional lending and news about Belgian Telenet acquiring local mobile network operator Base from Dutch group KPN. The pan-European FTSEurofirst 300 index advanced 0.8 percent, Germany’s DAX 30 rose 1.7 %. Mining and auto shares rose on expectations of higher demand from China, with BMW AG and Renault SA gaining 1.2% and 0.4% respectively. Euro traded lower against the dollar as investors were concerned about lack of progress in negotiations between Greece and its creditors. The Greek government on Monday ordered state companies and public pension funds to transfer cash reserves to the central bank as it faces a cash crunch to service debt. The Eurogroup of euro-zone finance ministers will meet on Friday, but expectations are low about any significant progress in debt standoff resolution. Economic data on Monday indicated euro-zone construction dropped 1.8% in February from January, and fell 3.7% from February of last year. And Germany’s statistics agency reported producer prices rose 0.1% in March from February, but on annual basis, prices fell 1.7% . Today at 11:00 CET April ZEW survey results for Germany and Euro-zone will come out. The tentative outlook is positive for euro.

Nikkei closed up 1.4% today, with Toyota Motor Corp and Nissan Motor Co gaining 2.2 percent and 2.4 percent respectively, while Panasonic Corp gained 3.7 percent. Tomorrow 00:50 CET March Merchandise Trade Balance will be released in Japan. The tentative outlook is positive for yen. At 02:30 CET first quarter Consumer Price Index will be released in Australia.

Crude-oil futures on West Texas Intermediate rose on Monday after China’s central bank announced a surprise 1 % cut in reserve requirements, while the June Brent crude-oil futures on ICE Futures exchange settled flat at $63.45 a barrel. Oil prices are falling today on expectations of US inventory build-up.

Gold prices fell on Monday on the back of stronger dollar and bolstered investor confidence in equity markets.