US earnings didn’t appear to be too bad Friday night. Amazon’s met expectations, and revenues were strong, rising over 20 per cent for the quarter. Yet the company expects an operating loss for this quarter (expansion into grocery, new warehousing etc) and so the stock ended the session nearly 10 per cent lower -- gives you a taste of things. Similarly, Visa reported better-than-expected profit, but softer-than-expected revenue -- so the stock was off 5 per cent. So far, of the 239 companies that have reported, 75 per cent have beat profit expectations.
The fact is, sentiment was great for the session but for whatever reason not even a lift in confidence of the all-powerful US consumers could shake things up. Consumer confidence rose to 84.1 on April, according to the final estimate of confidence from Michigan University. Other than that, tensions in Ukraine continue to rise, neither the US nor Russia willing to take genuine steps to de-escalate the crisis.
Equities were lower on Wall Street, with the S&P500 down 0.8 per cent (1863), the Dow off 140 points (16,361) and the Nasdaq 1.8 per cent lower (4075). Over in Europe, it was a similar story -- the Dax closed 1.5 per cent lower, the CaC was off 0.8 per cent and the FTSE100 was 0.3 per cent weaker.
Commodities had a mixed session, with most of the excitement in the crude space. WTI continued to sell off -- 1.3 per cent on Fridays’ session ($100.6) -- while Brent was off 0.9 per cent ($109.9), and that’s despite rising tensions in Ukraine. Elsewhere, moves weren’t that big -- gold was up $10.2 to $1300.8, silver was 0.1 per cent higher and copper was up 0.1 per cent also.
Forex markets saw small moves generally. On a 50 pip range, the euro is little changed as I write at 1.3845, up smalls. Similarly the yen did little and is at 102.21, while the British pound is unchanged at 1.6802. As for the Australian dollar, it pushed towards 93 cents in trading but ended unchanged as well (or little changed from Friday 1630 AEST) at 0.9274.
Rates ended little changed with the yield on the 10-year US Treasury at 2.666 per cent, little different from 2.668 per cent at 1630 AEST. The 5-year yield was at 1.7248 per cent from 1.717 per cent and the 2-year sits unchanged at 0.43337 per cent.
Elsewhere, there wasn’t much. In the US, the market services PMI slipped in April to 54.02 from 55.3. Then in Britain retail sales fell 0.4 per cent in March after a 1.3 per cent gain the month prior.
Markets this week -- naturally, it’s not going to be a great session today for the Australian market with the SPI suggesting stocks will be 0.4 per cent lower. For the rest of the week I guess the market will be watching Ukraine. There certainly won’t be much in the way of major domestic economic data to throw things around. The data flow kicks off Wednesday with the Reserve Bank’s credit numbers at 1130 AEST. On Thursday we see RP Data’s house price series (1000 AEST), trade prices (1130 AEST) and the RBA’s commodity price index (1630 AEST). On Friday we only get producer prices -- not a big week as you can see.
Looking abroad, Chinese data includes the manufacturing PMI on Thursday at 1100 AEST, and then the services PMI on Saturday. For the US it’s a big week. Earlier in the week it’s light – we’ll see pending home sales and S&P/Case-Shiller’s house price index. Then on Wednesday night US GDP is out followed by the FOMC rates decision on Thursday morning (0400 AEST). Thursday night sees personal income and spending and the ISM index, while on Friday payrolls are released. At this point, the market looks for a 205,000 lift in jobs, with the unemployment rate expected to fall to 6.6 per cent.