European Factors to Watch-Shares to set new 5-yr high, focus on Fed, earnings
LONDON Oct 21 (Reuters) - European shares were likely to set a new five-year high on Monday, with another record peak on Wall Street and expectations the U.S. Federal Reserve will press on with its easy monetary policy seen underpinning equities.
Investors' focus has shifted to the Fed's likely action after U.S. lawmakers voted on Wednesday to end a shutdown and lift the debt limit, averting a potential default that many economists had warned could tip the world's biggest economy back into another severe recession.
"A U.S. default has been averted and the disruption caused by ... these events has almost certainly ensured that the Fed won't taper until at least December, but probably towards the end of the first quarter of 2014," Alpari analyst Craig Erlam said in a note.
At 0623 GMT, futures for the Euro STOXX 50, UK's FTSE 100, Germany's DAX and France's CAC were 0.1 to 0.3 percent higher. German Bund futures opened 2 ticks higher at 140.07, with market moves expected to be limited before the U.S. resumes releasing the September economic data delayed because of the shutdown.
The pan-European FTSEurofirst 300 index, which closed 0.8 percent stronger on Friday, gained for a seventh straight session to hit a five-year high, while the S&P 500 ended at a fresh record high for the second straight day. On Monday, Japan's Nikkei was up 0.9 percent.
Investors will keep a close on eye on earnings numbers and data releases for hints about the market's near-term direction. Major companies announcing third-quarter results on Monday included SAP AG, Koninklijke Philips , Netflix and Texas Instruments.
The earnings season has been progressing well in the United States, where 20 percent of the companies on the S&P 500 index have already reported results, against just 7 percent for companies on the STOXX Europe 600 index.
According to Thomson Reuters StarMine data, 67 percent of the S&P 500 companies have met or beaten their third-quarter forecasts. In Europe, 63 percent companies have met or beaten predictions, while 37 have missed forecasts.
"My expectations are for a fairly good mix of solid company earnings and supportive macro data. The outlook of European companies should be better, given the stabilising economy," Christian Stocker, equity strategist at UniCredit, said.
Dutch healthcare, lighting and consumer appliances group Philips reported a near tripling in its third-quarter net profit on Monday, while German business software maker SAP stuck to its full-year outlook on Monday, but warned its revenue and core operating profit could take a hit from volatile exchange rates.
On the macroeconomic data front, focus will be on Italian industrial orders and sales numbers for August at 0800 GMT and U.S. existing home sales for September at 1400 GMT. -------------------------------------------------------------------------------- > Aussie shares hit 5-yr high, dollar near 8-mth low > S&P 500 ends at record high on strong earnings > Nikkei rises 0.9 pct on earnings hopes, Fed policy support > Bond yields end off lows as data set to take focus > Dollar steady, but seen vulnerable as Fed tapering view recedes > Gold hovers above $1,300 on U.S. stimulus bet > Copper drops on supply woes but delayed tapering hopes lend support > Brent holds above $110 on hopes of delay in U.S. Fed tapering
French utility EDF and the British government have signed an agreement to build two nuclear reactors for a total cost of 16 billion pounds ($25.9 billion), EDF said in a statement on Monday.
German business software maker SAP stuck to its full-year outlook on Monday but warned its revenue and core operating profit could take a hit from volatile exchange rates.
Dutch healthcare, lighting and consumer appliances group Philips reported a near tripling in its third-quarter net profit on Monday, thanks to improvements across the group after two years of rationalisaton.
Actelion has won U.S. approval for its drug Opsumit, a successor to its pulmonary arterial hypertension drug Tracleer, which loses patent protection in 2015. It will host a conference call at 1200 GMT.
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