World markets cautious ahead of US corporate earnings

 

Stocks were being traded cautiously across global markets today as investors prepared for the start of the US corporate earnings season and digested a mixed batch of European economic indicators.

The markets will get a feel for the health of corporate America as earnings reports start coming in. Aluminum producer Alcoa Inc. will be the first major company to release results for the fourth quarter of 2012 today after US markets close.

Events during the quarter such as Superstorm Sandy, the presidential election, and worries about the narrowly avoided "fiscal cliff" could lead to some unexpected results.

By midafternoon in Europe, Germany's DAX was 0.1 per cent lower at 7,723.00 while Britain's FTSE 100 was flat at 6,067.30. France's CAC-40 rose 0.4 per cent to 3,720.34. The euro edged down 0.2 per cent to $1.3086.

Wall Street opened slightly lower — both the Dow Jones industrial average and the broader S&P 500 were down 0.1 per cent, to 13,361.29 and 1,459.76.

European investors were torn between two sets of economic indicators.

One showed that unemployment in the 17-country eurozone hit 11.8 per cent in December, a record high and up from 11.7 per cent the previous month. The figure highlights the huge economic challenge facing Europe — although financial market turmoil has subsided, the labor market continues to weaken.

But a separate report was more upbeat, showing business and consumer sentiment in the eurozone rose in December by more than analysts were expecting and that retail sales edged up in November. That suggests that the improvement in financial markets during those months helped economic activity stabilize.

Analysts warned, however, not to expect any imminent turnaround in the economy.

"While it looks like economic activity may have bottomed out around October, any recovery still looks a hard slog," said Howard Archer, an economist with HIS Global Insight.

Earlier, Japan's Nikkei 225 index tumbled 0.9 per cent to 10,508.06 as the yen crept upward against the US  dollar. With the dollar down 0.5 per cent at 87.39 yen, some investors sold export shares that had surged as the currency weakened in recent weeks. Toyota Motor Corp. fell 2 per cent while Mazda Motor Corp. plunged 5 per cent. Nintendo Co. shed 3.1 per cent.

Hong Kong's Hang Seng fell 0.9 per cent to 23,111.19. South Korea's Kospi lost 0.7 per cent to 1,997.94. Benchmarks in Singapore, Taiwan and Thailand fell, while Malaysia and the Philippines rose. Mainland Chinese shares were mixed. Australia's S&P/ASX 200 shed 0.6 per cent to 4,690.20.

"Investors are taking a wait-and-see attitude," said Evan Lucas, strategist at IG Markets in Melbourne, adding that many investors went for profits ahead of the release Wednesday of weekly jobless claims in the US and the European Central Bank's rate-setting meeting on Thursday.

"A lot of eyes are watching what will happen in Europe and America over the next couple of days," he said.

Major indexes surged last week after US lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that have come to be known as the fiscal cliff. The deal, however, remains incomplete. Politicians will face another deadline in two months to agree on more spending cuts.

"The looming budget battle in the US has also prompted some hesitancy to buy risk assets," said analysts at Credit Agricole CIB in Hong Kong.

In commodity markets, benchmark crude for February delivery was up 23 cents to $93.42 per barrel in electronic trading on the New York Mercantile Exchange.

AP

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...