By FINTAN NG
fintan@thestar.com.my
In the usually quiet summer months in the northern hemisphere, the US earnings reporting season for the quarter ended June 30 which starts today should provide some guidance to market movements at a time of uncertainty.
A stockbroker told StarBiz that trading this week would likely hinge on news from the United States and the euro-zone.
Dow Jones component Alcoa Inc, an aluminum producer, would kick off the earnings reporting season today on Wall Street.
The company’s performance would be watched by investors for an indication on where the economy is headed as aluminum is an important component of industrial and consumer products.
According to analysts’ estimates compiled by Bloomberg, profits at S&P 500 companies were projected to have increased 34% in the April to June period and by the same amount for the year.
In a report dated July 9, HwangDBS Vickers Research said the benchmark FBM KLCI might still be in the mood to add on gains, possibly climbing towards the immediate resistance level of 1,340 on improving sentiment.
Sentiments were likely boosted by Bank Negara’s 25-basis point hike of the overnight policy rate last Thursday and the accompanying monetary policy committee statement noted economic activity remained robust in the second quarter ended June 30.
The central bank added that although there would be some moderation in the pace of growth going forward, “the domestic economy is expected to remain strong with continued improvements in private consumption and investment, augmented by public investment spending”.
Besides corporate earnings, a slew of economic reports are scheduled for release this week in the United States including the Federal Open Market Committee’s minutes from the June 22 to June 23 meeting on July 15.
Federal Reserve officials have indicated that the benchmark fed rate would be kept at between zero and 0.25% for an extended period in order to help the economy recover faster as it grappled with slowing new home-sales and weaker private-sector jobs growth.
Other reports to look out for include initial jobless claims for the week ended July 10, which would be released this Thursday.
Markets received a boost late last week when the jobless claims for the week ended July 3 showed a decrease for those claiming benefits from 21,000 to 454,000.
Thursday would also see the release of data for industrial production for the month of June and the Empire Manufacturing index, an indicator of manufacturing output in the region covered by the Federal Reserve Bank of New York, for the month of July.
The Thomson Reuters/University of Michigan survey of consumer confidence, a monthly barometer of US consumer sentiments is scheduled for release on Friday.
The survey showed sentiments rose in June despite losses in US stock markets due to the euro-zone debt crisis.
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