LONDON -- A raft of forecast-busting corporate earnings, another multi-billion dollar deal and few indications that the U.S. Federal Reserve is preparing to alter its super-loose monetary policy supported stocks Thursday despite ongoing turmoil in the Middle East.
Even though many of the world's major indices are trading at their highest levels since the summer of 2008, investors have not chosen to cash in on recent gains, partly because of a slew of upbeat earnings this week around the world, including those from Swiss food company Nestle on Thursday.
They have also been cheered by the previous day's news that French drug maker Sanofi-Aventis (SNY), the world's fourth-largest drugmaker, will buy U.S. biotechnology firm Genzyme (GENZ) for $20 billion in cash. A pick-up in big deals is one sign of optimism in the markets.
Further support was provided by Wednesday's publication of the minutes to the last rate-setting meeting of the Fed. Though, rate-setters were a little more optimistic about the state of the U.S. economic recovery and some voiced the possibility that the current $600 billion monetary injection may have to end sooner than expected, there were few signs that policy will be altered soon."Unchanged projections for unemployment and core inflation -- the Fed's original dual mandate -- imply no change in the Fed's assessment that both aspects of the mandate will be missed, thus no change in stance, for the moment, on monetary policy," said Jeremy Batstone-Carr, head of private client research at Charles Stanley stockbrokers. "Clearly, the market will be relieved that the Fed chose not to bite the monetary policy bullet at this meeting," he added. In Europe, the FTSE 100 index of leading British shares was down 0.1% at 6,080 while France's CAC-40 fell a similar amount to 4,148. Germany's DAX index was more or less unchanged at 7,413. Wall Street was also poised for a flat opening too, a day after the Dow Jones Industrial Average closed at its highest level since June 13, 2008, and the broader S&P 500 index ended double the level it was at two years ago. How stocks end the day could well hinge on a raft of U.S. economic data, not least monthly consumer price inflation figures.