Daily Market Update 9 July 2013 - Alcoa kicks of earnings with a ‘beat’





Daily Market Update 9 July 2013 - Alcoa kicks of earnings with a ‘beat’

A ‘beat’ to start US Q2 earnings season overnight with Alcoa reporting earnings per share of 7c. While higher than the 6c figure eyed by market analysts, including items the loss was 11c per share on the back of underwhelming revenues.

 

US consumer credit growth rose at the fastest pace in more than a year in May with the Federal Reserve reporting<http://www.federalreserve.gov/releases/g19/current/g19.pdf> an increase of $19.6b. The result was well ahead of the $12.5b expansion expected by the markets and the downwardly-revised $10.8b rise of April with both non-revolving (+$13b) and revolving credit (+$6.6b) gaining over the month.

 

Canadian building permits continued to surge higher in May with an increase of 4.5% reported<http://www.statcan.gc.ca/daily-quotidien/130708/dq130708a-eng.pdf>. The figure was well ahead of estimates for a decline of 6.2% and came on the back of an upwardly-revised increase if 11.2% previously seen in April.

 

The Bank of Canada released their latest business outlook survey overnight. To see the report in full, please click here<http://www.bankofcanada.ca/wp-content/uploads/2013/07/bos-summer2013.pdf>.

 

Eurozone investor sentiment fell more-than-expected in July with the Sentix<http://www.sentix.de/index.php/component/option,com_rokdownloads/Itemid,221/id,756/view,file/> index slipping to -12.6. The result was below the -11.6 reading of June and expectations for an increase to -10.0.

 

Adding to signs of an economic slowdown, or perhaps demonstrating the impact of Abenomics on other export-orientated nations, Germany’s trade<https://www.destatis.de/EN/PressServices/Press/pr/2013/07/PE13_224_51.html;jsessionid=D41587E25703BE1AEF70AD413B9DBA08.cae1> surplus narrowed in June with a decline to €14.1b reported. The result was below the €17.5b figure that had been expected with a 2.4% decline in exports and 1.7% lift in imports behind the unexpected result.

 

Complementing the disappointing trade data released earlier in the session, German industrial output missed to the downside in June with a decline of 1.0% reported. The figure was double market expectations for a fall of 0.5% and was the first month in four that output had contracted. A 0.7% decline in manufacturing output, led by falls in capital goods and consumer durable goods, along with lower construction and energy activity, were the chief catalysts behind the weak result.

 

Swiss unemployment ticked higher in June, rising 0.1% to 3.2%. While that was a tad disappointing, there was some good news on the industrial front with orders rising 0.6% on year during the first quarter, an improvement on the -1.4% contraction seen in the year to December 31.

 

Taiwanese trade data, until recently a reliable forward-indicator for what we’re likely to witness in China, smashed expectations last month with exports (+8.6% yy) and imports  (+6.8% yy) growing strongly in the year to June. The results were well above the +2.3% and -0.02% figures that had been expected by the markets.

 

The Day Ahead (All times AEST)

 

The ASX 200 looks set to recoup most of yesterday’s losses this morning with SPI futures pointing to a rise of 26pts on the open. While there’s every chance the index will surge beyond this level, commodity prices were higher, volumes will be thin and short-term positioning is short, given the near vice-like grip that mainland Chinese equity markets have had on the index of late, the performance of those indices will likely determine how we finish off today’s trading session.

 

Aided by thin volumes, higher commodity prices and news speculators had increased net short positioning in the AUD over the course of last week, the AUDUSD went on a short-covering frenzy overnight with the pair surging to as high as .9145 before easing into the close. Today we expect the China CPI data, along with the subsequent movements of the Shanghai Composite, to be highly influential yet again as trading volumes remain low before major events later in the week. Support is found below .9120 and again at .9087 with resistance kicking in at the overnight high and above .9170. Should the pair get to the latter, expect it to be met with heavy selling.

 

The NAB business survey for June will be released at 11.30am this morning. On the regional front we’ll receive June CPI from China, an important release given recent economic weakness, New Zealand Q2 business confidence along with retail sales and RICS house price survey from the UK.

 

A quiet economic calendar this evening with trade, industrial orders and NIESR GDP estimate out in the UK, French budget figures and Canadian housing starts the only releases of note.

 




 














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