Negative leads from the US may push Asian stocks lower
City Index April 20, 2012 5:40 PM
<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.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.