GLOBAL MARKETS-Shares down ahead of earnings, yen stronger

Tue Jan 8, 2013 12:46pm EST

* US stocks down ahead of earnings, profits seen limp
    * Dollar falls vs yen after sharp, rapid rise
    * Euro zone data points to stabilization of weak economy
    * Brent oil edges higher; gold also rises


    By Ryan Vlastelica
    NEW YORK, Jan 8 (Reuters) - Global shares fell on Tuesday,
with U.S. investors cautious ahead of an earnings season
expected to show sluggish growth in corporate profits.
    The dollar paused a sharp rally against the yen that
has boosted it almost 12 percent in less than two months. The
rise has come as expectations grow that Japan's new government
will push the central bank to ease policy aggressively in the
next few months.
    The dollar was last down 0.7 percent at 87.18 yen, well off
a 2-1/2-year high hit last Friday.
    Profits in the U.S. fourth quarter are seen above the
previous quarter's lackluster results, but analysts' estimates
are down sharply from where they were in October. Quarterly
earnings are expected to grow by 2.8 percent, according to
Thomson Reuters data. 
    Alcoa Inc reports results after the market closes on
Tuesday, marking the unofficial start to the season as the first
Dow component to report.
    Early reports have suggested some signs of improvement.
Monsanto Co reported strong first-quarter results and
raised its full-year outlook, sending its shares up 2.8 percent
to $98.63. 
    Sears Holding Corp reported sales for the holiday
season that were not as weak as many had feared, but the stock
sank as the company's chief executive stepped down unexpectedly.
 
    If earnings growth appears to be "less bad" than expected,
that would fuel a near-term uptick in the market, according to
Eric Wiegand, senior portfolio manager at U.S. Bank Wealth
Management in New York. "There's still ample areas for concern,"
he added, citing policy worries in Washington and uneven
economic activity.
    The Dow Jones industrial average was down 75.11
points, or 0.56 percent, at 13,309.18. The Standard & Poor's 500
Index was down 8.53 points, or 0.58 percent, at 1,453.36.
The Nasdaq Composite Index was down 19.68 points, or
0.63 percent, at 3,079.14. 
    Global shares measured by MSCI's ACWI price index
 fell 0.5 percent.
    Europe ended 0.1 percent lower as data showed the
euro zone economy may be stabilizing, though at a weak level.
The euro held steady while commodity markets were largely
subdued as investors sat on recent gains.
    Euro zone business confidence improved again in December,
but unemployment reached a record and households held back from
spending in the run-up to Christmas, suggesting a recovery from
recession will be slow. German industrial orders also fell more
than forecast due to a sharp drop in demand from abroad.
  
    "Things are bad. It is still consistent with recession, but
at least they have stopped deteriorating," said Deutsche Bank
economist Gilles Moec.
    The euro was steady at just over $1.3120.
 
    
    STEADY BOND MARKETS
    Bond markets smoothly digested the first debt sales of the
year by the Netherlands and Austria, as well as Spain's
announcement that it plans to borrow 121.3 billion euros this
year, 7.6 percent more than in 2012. 
    Madrid is expected to turn to official lenders for a bailout
in 2013, although a European Central Bank promise to preserve
the euro has significantly reduced the pressure.
    German government bond prices also edged higher as investors
dipped a toe back into the market for low-yielding but secure
assets as a steep sell-off last week made valuations more
attractive. 
    The German bund future was up 32 ticks at 143.38,
climbing for a second day after a small rise on Monday and
moving in line with U.S. Treasuries. The rebound follows a
three-point sell-off last week when an easing of U.S. fiscal
concerns caused investors to pile into riskier assets. 
    The benchmark 10-year U.S. Treasury note was up
8/32, the yield at 1.8709 percent. 
    In commodity and metals markets, Brent crude oil 
rose 0.4 percent to $111.88 per barrel while U.S. light crude
was down 0.2 percent at $92.99. Copper rose 0.1 percent
and gold edged back above $1,655 an ounce before data on
Thursday from China and the ECB's monthly meeting.
    "The market is underpinned by expectations that a cyclical
rebounding out of China will be positive for industrial metals,
and there is more positive sentiment now in the market," said
Robin Bhar, analyst at Societe Generale.
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.