Negative leads from the US may push Asian stocks lower

<p>Asian markets are expected to open slightly lower on the back of some negative leads form US markets. While earnings have so far continued to […]</p>

Asian markets are expected to open slightly lower on the back of some negative leads form US markets. While earnings have so far continued to come in line or slightly beat expectations, the jobs data put a dampener on the corporate numbers, sending the S&P500 0.6% lower.

The Australian dollar was last trading at 1.0345 US cents, the Euro at 1.3141. The US dollar is relatively flat against the Japanese Yen on yesterday’s levels, last at 81.65.

Gold failed to post a rally from its recent falls and copper remains within its recent trading range, last at US$3.62/lb.

Two large industrials have posted earnings downgrades this morning on the Australian market. Mining services provider Bradken says it now expects full year 2012 earnings to range between $95-$102m.

Market expectations are for earnings of $117m so there will be downgrades on the market, perhaps now down to the lower end of the guided range until some trust is restored with the market.

Bradken blames two factors within its rail division for the lower than expected profit – a one-off increase in costs of $16m and a reduction in sales volume in the order of $35m.

The other company to downgrade this morning is building materials provider Boral which has operations in the United States, Australia and across Asia.

It says net profit for the third quarter of this financial year is around $22m below internal forecast and so full year earnings guidance should be reduced by that amount.

Weather is partly to blame in Australia, while United States and Asian markets remain broadly in line with expectations.

Guidance was previously for the full year result to be $150m-$175m, so deducting $22m from the midpoint would imply a downgrade in the order of around 13.5%. The impact from weather on earnings might prompt other industrials to follow suit.


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