Cautious trading as Alcoa kicks of earnings

Wednesday, July 09, 2014

US stock indices trailed lower yesterday, unable to overcome the cautious undertones displayed by most market participants as earning season got underway. Despite Alcoa reporting better than expected second quarter profit at 18 cents a share, against the expectation of 12 cents a share both the DJIA and S&P 500 closed lower for the second consecutive session, with the Dow ending the day under 17,000. Further details from the earnings call indicated a slight improvement in average realised primary aluminium prices, which increased 2.4% to $2,291/tonne aided significantly by rising premiums. With Alcoa setting the tone with positive results expectations for stellar performance among blue chip companies are high, however, investors will be paying close attention to growth figures in particular to provide further insight into the economic condition.

Asian markets continued the softer tone seen on Wall Street as benchmark indices in the region extended declines. Chinese stocks remained under pressure throughout the session as market participants adopted a wait-and-see approach ahead of further corporate earnings releases this week. Signs of stabilisation were beginning to emerge as factory prices continued to decline at a slower pace in June, falling by -1.1% y/y from -1.4% the previous months as signs of Beijing’s efforts to ease producer price deflation were slowly having the desired impact. CPI accelerated 2.3% in June from 2.5% the previous month which could afford the government with room for further measures if necessary.

Investors will be approaching markets with caution over the coming session as they await earnings reports from both sides of the Atlantic. With only EIA crude oil inventories to look forward to on the macro data front we expect a continuation of yesterday’s tentative trading activity.

DJIA closes below 17,000 on profit taking

DJI Index Dow Jones Industrial 2014 07 09 08 24 31 

Chinese PPI decelerate at a slower pace in June

CHEFTYOY Index China PPI Yoy 2014 07 09 07 54 32

Events for today

0230

CN

Jun

CPI & PPI

1530

US

w/e

EIA Energy Stocks

Topics: Equities, Aluminium, CPI
More from: Kash Kamal