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To: NetResearch Asia 25 Apr 2013
Subject: US market takes a breather following signs of slowing US economic
growth
Pre-Market Open Commentary for 25 April 2013
( CO. REG. NO.
199904258C )
DJIA: 14676.30 -43.16
Nasdaq Composite: 3269.65 +0.32
Good morning, fellow investors
US market closed mixed with the Dow Jones Industrial average closing lower
after three consecutive days of gains, while the S&P 500 and Nasdaq closed
flat in lackluster trading after mixed corporate earnings reports and a
disappointing durable goods orders report.
Mixed earnings reports led to lackluster trading. Dow component Procter&
Gamble reported stronger than expected quarterly earnings but a lowered
forward guidance led the share price 5.9% lower. AT&T also disappointed
market with a weaker than expected revenue and net loss of cellphone
subscribers which led the share price 5.0% lower. On a brighter note,
Boeing reported earnings growth than exceeded expectations despite worries
over the company's 787 Dreamliner problems, and that led to a 3% share
price gain. Separately, market was encouraged by Yum’s stronger than
expected earnings, despite a drop in sales in its top China market, and the
firm’s unchanged earnings outlook for 2013, leading to a share price gain
of 7.0%. On the tech front, Apple shares extended losses of 0.2% after the
firm guided on slower forward growth and lower margins and a lack of new
products in the new term.
A weak reading on durable goods order also weakened sentiment. Orders for
long-lasting US manufactured goods tumbled 5.7% in March, recording the
biggest drop in seven months and weaker than expectations of a fall of
2.8%, after a revised 4.3% rise in February. Excluding transportation,
orders declined 1.4% in March after falling 1.7% the prior month. The weak
tone of the report, along with other weak retail and manufacturing reports,
is suggesting that the economy has lost momentum towards the end of 1Q2013
and this is likely the result of uncertainty over the impact of deep
government spending cuts that is making businesses more cautious on capital
spending.
The three major US indices closed mixed with the Dow Jones Industrial
Average dipping 0.29% while the S&P 500 and the Nasdaq closed flat, rising
0.01 points and 0.32 points (+0.01%) respectively.
On Thursday, market will take leads from results of oil majors including
ConocoPhillips, ExxonMobil as well as 3M and UPS. The jobless claims report
will also provide market a feel on jobs market conditions.
Crude oil for June delivery added US$2.25 a barrel, or 2.52%, to settle at
US$91.43 a barrel.
In Singapore today:
Asian markets surged on Wednesday as risk appetite improves following
overnight strength on Wall Street. Strong corporate earnings from Du Pont,
United Technologies and Netflix eased pessimism over dismal global
manufacturing data and lifted sentiment in Asia. Singapore shares had a
weak positive start in the early session but selective buying of blue chips
in the late session lifted the STI index 38.36 points, or 1.17%, to
3322.71. For every stock that fell, 2.3 rose. Turnover was 2.4 bil shares
with a value of $1.8 bil traded.
Shares of Fraser and Neave (F&N) extended losses yesterday, falling 39
cents or 4.8%, to close at $7.81, ahead of the share being excluded from
the MSCI Singapore index in which F&N had a 3.36% allocation. Since F&N
resumed trading on Monday this week, the share was down a steep 17.3% and
is likely to see a technical rebound today, post index-related selling
yesterday.
Expect a day of tepid and cautious trading on the local bourse following a
lackluster overnight close on Wall Street following signs of slowing growth
in the world’s largest economy.
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