Traders said that as Wall Street heads back into record territory, European stock markets were steady to firmer on Tuesday following strong earnings from numerous blue-chip companies, such as McDonald’s and Caterpillar.
Investors regained confidence after Caterpillar, a US industrial giant, lifted its profit outlook following a huge jump in third-quarter earnings.
McDonald’s also surged after reporting an increase of almost 50 percent in third-quarter profits.
Later this week, other major companies are similarly set to publish their earnings.
“Global equities are trading higher into the afternoon as investors await key trading updates from major Dow Jones listed companies,” stated Henry Croft, the Accendo Markets analyst.
A key survey that was released on Tuesday revealed that in October, business activity that are across the single currency area slowed in the eurozone. However, as the economic recovery in Europe stayed on track, job creation hit the quickest pace in a decade.
In a statement, the group said that in October, a purchasing managers’ index (PMI) that was compiled by Markit decreased to 55.9 after 56.7 in September.
“The eurozone PMI surprised on the downside in October… but underlying data should encourage (the) ECB,” stated Bert Colijn, the ING bank economist.
“While the drop… could point to a somewhat slower (eurozone) GDP growth in the last quarter of the year, it does seem that growth will remain healthy and that the economy could weather slower asset purchases by the ECB,” Colijn added in a client note.
Traders were looking forward to Thursday when the European Central Bank is scheduled to announce a big cut in its financial stimulus support for a recovering eurozone economy.
In 2015, the European Central Bank started buying huge amounts of bonds to counter the threat of deflation — a damaging downward spiral of activity and prices.
Since then, there was an improvement in the state of the eurozone economy, and on Tuesday, the ECB said that in the third quarter of 2017, households that are across the single currency bloc experienced easier access to credit.
The ECB closely observes lending data in order to assess the effectiveness of its ultra-loose monetary policy, which strives to bolster growth and inflation in the single currency area by boosting spending and investment.
Earlier, another broad advance across Asian stocks markets was led by Tokyo’s Nikkei, with the index chalking up its sixteenth straight gain to continue an impressive record streak.
On the back of a weaker yen, the Japanese market stirred to fresh 21-year highs and expected that the weekend election landslide victory of Prime Minister Shinzo Abe would steer in additional measures to improve the number three economy in the world.