Global outlook succeeds

Barrels outside the Diageo Shieldhall facility near Glasgow, Scotland.  The company is among...
Barrels outside the Diageo Shieldhall facility near Glasgow, Scotland. The company is among multinationals doing well because their earnings are more broadly focused. Photo by Reuters.

Multinational listed global companies are leading a revival in world sharemarkets this week, Craigs Investment Partners broker Chris Timms says.

Despite the gloom in Europe and concerns over whether the United States Congress will reach agreement on the looming debt ceiling, sharemarkets have shrugged off some of the doubts, he said yesterday. European shares edged up yesterday, moving back towards their recent near-two-year-high. Traders said the longer-term outlook remained bullish for European markets, even as some key indices fell back from technically ''over-bought'' levels.

The pan-European FTSEuro-first 300 rose to 1165 points, heading back to the 1170 it reached earlier this month, its highest level since early March 2011.

US markets were closed for the Martin Luther King holiday but expectations a political deal would be reached in the US to raise the country's debt ceiling helped investor confidence. The Republican Party said it would seek to pass a three-month extension of federal borrowing authority next week.

Britain's FTSE 100 nudged fresh four and a-half year peaks, also boosted by signs of progress on the US budget talks.

Exporters drew some strength from weakness in the pound, which dropped to 10-month lows against the euro and nine-week lows against the US dollar. That could make Britain's exports more attractive and increase the value in pounds of companies' profits earned abroad.

Mr Timms said markets were seeing more positive news from China and the US.

''It's also the middle of the reporting season and we are seeing some big numbers coming out of the US.''

Companies like Google, Yahoo! and IBM were due to report today or tomorrow. They all dealt internationally, rather than being focused just on their home markets. It was the same for some of the larger European companies. While business was tough in some parts of Europe, those companies which had looked outward were doing well, he said.

''People are more confident in taking a longer-term view and looking at longer-term assets. Companies like Vodafone and Diageo are listed in Europe but are not European-focused. It is the same as we saw in the US last year - multinationals did well because their earnings were not focused there,'' Mr Timms said.

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