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Sentiment slips, steady start

Sentiment slips, steady start

Asia Pacific markets are looking at a cautious day’s trading. Stronger than expected non-farm payrolls lifted stocks out of the red on Friday night, but ongoing concerns about Sino-US relations, and the lack of bi-partisan agreement on a US fiscal support package, are weighing on sentiment. Crude oil and base metals are under pressure, although both gold and longer bonds have pulled back from recent highs.

Hong Kong, Singapore and China mainland stock futures closed lower on Saturday morning. In contrast, indices for Japan and Australia moved higher. The US dollar is holding higher ground this morning, indicating a tilt towards risk off trading, especially if international investors become wary of the outlook for regional currencies.

The US company reporting season enters its final week tonight. With more around 90% of top reports in, the results across the US SPX 500 companies are better than expected. Sales and earnings both declined over the quarter by around 10%. This means sales were broadly in line, but profits were around 20% ahead of forecasts.

On Friday night, mobile businesses had mixed fortunes – T-Mobile came in well above estimates but Motorola missed. NewsCorp’s loss was lower than forecast and Alliant Energy delivered above forecasts. Tonight brings reports from Duke Energy  (EPS f/c $1.03), Royal Caribbean (EPS f/c -$4.88), and Marriott International (EPS f/c -$0.42).

The Australian stock reporting season gets underway this week. Rail transport group Aurizon reported a 7% lift in earnings this morning, but GPT took a $519 million loss on property revaluation. This week sees Challenger, Commonwealth Bank, Telstra, AGL, Computershare and Seek all report to shareholders, among others.

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