Markets await US GDP figures for further cue

Last week’s better-than-expected earnings at US companies including UPS, Apple, Microsoft and Ford fuelled a Wall Street rally that nearly erased the Dow Jones Industrial Average’s 2010 loss. Per-share profits at UPS, Apple and Ford beat the average analyst estimate by at least 9 percent lifting confidence the economy is recovering.

The S&P 500 rose 3.6 percent to 1,102.66 last week, wiping out its 1.2 percent loss from July 12 to July 16. The Dow reduced its 2010 decline to less than 0.1 percent after gaining 326.72 points, or 3.2 percent, to 10,424.62.

Meanwhile, European stock markets shrugged off weak US labour data on Thursday and instead followed strong US corporate results, with banks in the lead on expectations they have passed crucial stress tests.

The FTSE 100 on Friday closed down just 1.19 points at 5312.62. That leaves the blue-chip index up around 3 per cent for the last week. The FTSE 250 perked up 90.49 points to 10093.67.

Investors also set aside remarks from US Federal Reserve Chairman Ben Bernanke that the outlook for the US recovery was "unusually uncertain."

This week will see more results from bellwethers like Chevron, DuPont and Boeing. But it will take another spate of convincing earnings reports to sustain the Wall Street rally triggered at the end of last week.

Europe's bank stress testing, which dominated the past week's market debate, may have some impact on Monday. But if Friday's session is an indication, market movement will likely be muted.

The US second-quarter GDP, out on Friday, will be the biggest piece of data likely to attract investors' attention this week. According to the median estimate of 68 economists surveyed by Bloomberg News, GDP rose at a 2.5 percent annual pace after increasing at a 2.7 percent rate in the first three months of the year.

Meanwhile, better-than-expected results at the US companies and gain in commodity prices pushed Asian stocks higher for a third week.

The MSCI Asia Pacific Index advanced for a third-straight week climbing 1.0 percent and registering the longest winning streak since the week ended April 16. Hang Seng Index gained 2.8 percent last week as Hong Kong’s developers rose on prospects of higher property prices. China’s Shanghai Composite Index surged 6.1 percent, with South Korea’s Kospi Index increasing 1.1 percent.

Australia’s S&P/ASX 200 Index rose 0.8 percent, led by materials companies. Japan’s Nikkei 225 Stock Average gained 0.2 percent in a four- day, holiday-shortened week.

Today, Japanese stocks rose after the results of the stress test among European banks reduced economic uncertainties and as the yen weakened. The Nikkei 225 Stock Average rose 1.2 percent to 9,542.92 as of 9:09 a.m. in Tokyo. The broader Topix index gained 1.1 percent to 850.15.