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Global stock market shares cool after best week of the year

Spencer Platt, Getty

Global stock markets were heading for their best week of the year on Friday following reassuring company results, encouraging data from the world's biggest economies and signs the ECB is upping its efforts to liftEurope.

European bank stress-test results due at the weekend and confirmation of New York City andMali's first cases of Ebola saw a touch of caution return, though markets were just happy to have broken out of a steep month-long selloff.

Wall Street's S&P 500 <.SPX> was set to open around 0.25 percent lower partly on the Ebola jitters and partly on profit taking. It was still heading for a weekly gain of over 3 percent, it's biggest since December last year.

The MSCI 45-country world index <.MIWD00000PUS> was set for its strongest run since last July and oil was on track for its first rise in five weeks, having been battered recently by a combination of global growth and oversupply worries.

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"This week has been pretty crazy," said Kully Samra a managing director at U.S. trading firm Charles Schwab inLondon.

"It's has been the strongest week of the year for stocks, we have seen triple digit moves (in points) on the Dow and the volumes have been very, very strong, well above a billion."

Before U.S. trading, European shares were paring their early losses as investors took a more relaxed view of the Ebola cases and bet Sunday's bank stress-test results would not expose any horror stories but would be credible enough to ensure repairs in the sector continued.

Banking stocks were the day's outperformers, rising 0.3 percent compared with falls of 0.3-0.6 percent on the main bourses inLondon<.FTSE>, Frankfurt <.GDAXI> and Paris <.FCHI>.

It has been an intense, year-long process for the ECB, and leaks have begun to filter out. Spanish news agency Efe reported that at least 11 banks from six European countries were set to fail the review.

The euro <EUR=> was hovering flat at $1.2638, while southern euro zone bonds for the most part enjoyed a dip in yields. Both had fallen for much of the week afterEuropean Central Bankinsiders told Reuters the bank was drawing up plans for a corporate bond purchase program.

BEST WEEK OF YEAR

The Ebola fears saw S&P 500 mini futures <ESc1> dip 0.25 percent, but U.S. markets are at two-week highs on budding optimism from corporate earnings and the global economy.

So far, 177 of the S&P 500 companies have posted third-quarter results and 69.5 percent have beaten expectations. That was better than the 67 percent rate over the past four quarters and higher than the 20-year average of 63 percent, Thomson Reuters data showed.

There was also focus onRussiaandUkraine, withRussiafacing a rating review from Standard & Poor's after markets close and elections taking place inUkraineon Sunday.

The rouble was at a record low and stocks were in the red beforethe S&P review, which could cutRussia's credit rating cut to 'junk'.Moscow, however, hopes its solid finances will avoid a downgrade, which would be the second downgrade from a major rating agency in as many weeks.

"I would assume that it is too early to revisit the ratings. But this is my personal opinion. The rating agencies work according to their methodologies," a former Russian finance minister and outspoken policy critic,Alexei Kudrin, told Reuters at an event inLondonthis week.

ELECTION FEVER

Greater political stability inUkrainecould aid the broader European economy, which has suffered from the drop in trade withRussiaon tit-for-tat sanctions between the West andMoscow.

"I suspect one often overlooked reason for the market's rebound since the middle of this week was signs of easing tensions betweenRussiaandUkraine," saidSoichiro Monji, chief strategist at Daiwa SB Investments.

PresidentPetro Poroshenko's bloc holds a big lead ahead of Sunday's poll inUkraine, but populistOleh Lyashko’s Radical partycould also make a strong showing.

If so, it would put Poroshenko in the awkward position of seeking support from a politician who has been sharply critical of his peace plan and contacts with Russian PresidentVladimir Putin.

Brazil also holds the second round of its elections. TheBovespastock index <.BVSP> hit a six-month low while the Brazilian real slumped to a 9-1/2-year low on Thursday as markets wagered current PresidentDilma Rousseffis likely to beat rival Aecio Neves, who is seen as more market-friendly.

(Editing by Larry King)

 
 
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