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US market slips ahead of earnings | | | | | From: NetResearch Asia [[email protected]]
Sent: Tuesday, January 08, 2013 9:32 AM
To: NetResearch Asia 8 Jan 2013
Subject: US market slips ahead of earnings
Pre-Market Open Commentary for 08 January 2013
( CO. REG. NO.
199904258C )
DJIA: 13384.29 -50.92
Nasdaq Composite: 3098.81 -2.85 Good morning, fellow investors
US stocks lost ground on Monday on modest profit-taking in anticipation of
sluggish growth in corporate profits in the coming fourth quarter earnings
season. According to S&P Capital IQ, earnings for the companies in the S&P
500 are expected to rise a modest 3.3% YoY in the fourth quarter of 2012.
Markets were also pressured by weakness in financial shares after a group
of ten major US banks, including Bank of America (BoA), Citigroup,
JPMorgan, and Wells Fargo, agreed to pay a total of US$8.5bil to end a
government inquiry into faulty mortgage foreclosures. In a separate case,
BoA announced a US$11.6 bil of settlements with mortgage finance company
Fannie Mae and a US$$1.8 bil sale of collection rights on home loans which
further pressured BOA shares.
The prospects of more political wrangling over raising the federal debt
ceiling in the coming weeks further weighed on markets. The US debt ceiling
has hit US$16.4 trillion limit as at 31 Dec 2012 and without raising the
debt limit by late February or early March 2013, the US runs the risk of
defaulting on its obligations as the Treasury would no longer have
sufficient funds to meet expenditures. In view of that, Treasury Secretary
Timothy Geithner has begun taking extraordinary measures to finance about
US$200 bil in debt that would last about two months.
The major US indices closed lower with the Dow Jones Industrial Average
losing 0.38% while the S&P 500 lost 0.31% to 1461.89. The Nasdaq Composite
index dipped 0.09%.
Market will take leads from the quarterly results of the US’ largest
aluminum producer, Alcoa, which will kick-start the earnings season after
market closes on Tuesday. A consumer credit report due for release on the
same day will offer a sense of US consumer spending behavior during the
2012 holiday season.
Crude oil for February delivery gained US$0.10 a barrel, or 0.11%, to
settle at US$93.19 a barrel.
In Singapore today:
Asian shares closed lower on Monday on profit-taking from a New Year rally
and as investor erred on the side of caution ahead of the fourth-quarter
earnings season in the US that will kick off with aluminum producer Alcoa’s
4QFY12 results on Tuesday. The Nikkei 225 fell 0.83% as a pause in the
yen’s weakness triggered profit-taking on exporters while the Hang Seng
index and the Kospi closed marginally lower by 0.01% and 0.03%
respectively. The Shanghai Composite index bucked the trend with a 0.37%
gain.
Singapore shares opened on a positive note following a firmer close on Wall
Street last Friday but reversed into the red in afternoon trading on modest
profit taking from last week’s gains. Mirroring weakness in regional
bourses, the STI index dipped a modest 6.96 points, or 0.22%, at 3218.26
points. For every stock that fell, 2.9 rose. Penny stocks continued to
dominate trading as reflected in the high turnover of 6.02 bil shares with
a value of $1.64 bil traded.
Expect modest weakness on the local bourse today as the prospects of weak
US corporate earnings in the coming earnings season and political wrangling
over the US debt ceiling could trigger further profit-taking on recent
gains. | |
....
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