To: NetResearch Asia 25 Apr 2013 Subject: US market takes a breather following signs of slowing US economic growth Pre-Market Open Commentary for 25 April 2013 ( CO. REG. NO. 199904258C ) DJIA: 14676.30 -43.16 Nasdaq Composite: 3269.65 +0.32 Good morning, fellow investors US market closed mixed with the Dow Jones Industrial average closing lower after three consecutive days of gains, while the S&P 500 and Nasdaq closed flat in lackluster trading after mixed corporate earnings reports and a disappointing durable goods orders report. Mixed earnings reports led to lackluster trading. Dow component Procter& Gamble reported stronger than expected quarterly earnings but a lowered forward guidance led the share price 5.9% lower. AT&T also disappointed market with a weaker than expected revenue and net loss of cellphone subscribers which led the share price 5.0% lower. On a brighter note, Boeing reported earnings growth than exceeded expectations despite worries over the company's 787 Dreamliner problems, and that led to a 3% share price gain. Separately, market was encouraged by Yum’s stronger than expected earnings, despite a drop in sales in its top China market, and the firm’s unchanged earnings outlook for 2013, leading to a share price gain of 7.0%. On the tech front, Apple shares extended losses of 0.2% after the firm guided on slower forward growth and lower margins and a lack of new products in the new term. A weak reading on durable goods order also weakened sentiment. Orders for long-lasting US manufactured goods tumbled 5.7% in March, recording the biggest drop in seven months and weaker than expectations of a fall of 2.8%, after a revised 4.3% rise in February. Excluding transportation, orders declined 1.4% in March after falling 1.7% the prior month. The weak tone of the report, along with other weak retail and manufacturing reports, is suggesting that the economy has lost momentum towards the end of 1Q2013 and this is likely the result of uncertainty over the impact of deep government spending cuts that is making businesses more cautious on capital spending. The three major US indices closed mixed with the Dow Jones Industrial Average dipping 0.29% while the S&P 500 and the Nasdaq closed flat, rising 0.01 points and 0.32 points (+0.01%) respectively. On Thursday, market will take leads from results of oil majors including ConocoPhillips, ExxonMobil as well as 3M and UPS. The jobless claims report will also provide market a feel on jobs market conditions. Crude oil for June delivery added US$2.25 a barrel, or 2.52%, to settle at US$91.43 a barrel. In Singapore today: Asian markets surged on Wednesday as risk appetite improves following overnight strength on Wall Street. Strong corporate earnings from Du Pont, United Technologies and Netflix eased pessimism over dismal global manufacturing data and lifted sentiment in Asia. Singapore shares had a weak positive start in the early session but selective buying of blue chips in the late session lifted the STI index 38.36 points, or 1.17%, to 3322.71. For every stock that fell, 2.3 rose. Turnover was 2.4 bil shares with a value of $1.8 bil traded. Shares of Fraser and Neave (F&N) extended losses yesterday, falling 39 cents or 4.8%, to close at $7.81, ahead of the share being excluded from the MSCI Singapore index in which F&N had a 3.36% allocation. Since F&N resumed trading on Monday this week, the share was down a steep 17.3% and is likely to see a technical rebound today, post index-related selling yesterday. Expect a day of tepid and cautious trading on the local bourse following a lackluster overnight close on Wall Street following signs of slowing growth in the world’s largest economy. |