World Equity Prices Rise
World equity prices rose on Friday, as investors hoped for improvement in the global economy.
In London, the Financial Times-Stock Exchange 100 index rose 18.50 points to 5359.30, along with rising U.S. and Japanese stocks. Among major companies, Man Group rose after CSFB raised its share forecast for the stock. Easynet fell as its first half net loss widened. Centrica fell after the company said its 2005 earnings would be at the low end of forecasts. Go-Ahead Group rose after reporting a full year profit of 63.7 million pounds vs. a 16.3 million loss year ago.
In Frankfurt, the DAX Index rose 13.18 points to 5005.93 on hopes that Germany's economic improvement will continue. Among major companies, Puma rose after Guenter and Daniela Herz increased their stake in the company to more than 25%. TUI AG fell as China Shipping Group refused to bow out of its bidding for CP Ships Ltd. Volkswagen rose on speculation that the company will announce further restructuring.
In Paris, the CAC 40 rose 25.74 points to the 4491.68 level even though French Industrial Production declined 0.9% in July. Among major companies listed in France, Cap Gemini rose after ABN Amro raised its rating on the stock to buy from hold and JP Morgan Chase raised its share forecast. PSA Peugeot Citroen rose after WestLB raised its rating on the stock to outperform from neutral. Geodis rose after the company confirmed a report that its operating profit will increase 30% by 2007.
Meanwhile the Japanese Nikkei 225 rallied 158.15 points (1.26%) to 12,692.04, as investors speculated about whether Prime Minister Koizumi would win the country's general election Sunday. Financial markets would mostly favor a Koizumi win as he has instituted structural reforms during his tenure to help revitalize the economy after a decade of malaise in the nineties. Many are speculating that the nation has turned the corner this time, as compared with numerous false starts in the past.
The broad-based TOPIX index rose 14.45 points, or 1.1%, to 1293.35. The index closed at its high for the day, with the gain accompanied by a surge in volume to the highest level ever on the first section of the Tokyo stock exchange. Meanwhile, stocks in Hong Kong closed little changed, recovering from early weakness in the afternoon. Uncertainty over the U.S. Federal Reserve's rate policy in the wake of the Katrina disaster weighed on sentiment, much like it has in the U.S. this week. The Hong Kong dollar is pegged to the greenback, so inflation and interest rates in the U.S. can affect the local economy directly.