Earnings season

It is very difficult to draw conclusions for the whole earnings season basing on the reaction of investors to Alcoa results. However it is quiet probable that the growth on Wall Street will continue if the quarterly results at each level are be better than expected. Market estimates that in the first quarter net profits of companies included in the S & P500 index increased by 11.4% yoy. This week investors will also have a chance to get to know results of other big companies (JPMorgan Chase, Google, Bank of America and Mattel).

Commodities and the companies

Over the next three weeks the publication of quarterly reports by companies from Wall Street will be one of the main themes on the market. At least until April 27, when the FOMC meeting is scheduled. The results will affect not only market shares but also other markets. Disappointing information coming from companies can increase risk aversion, which can result  in the decline in the oil and copper markets. The better than expected results of especially if they go hand in hand with the optimistic forecasts for the future, will trigger the opposite reaction.

Tuesday's calendar

In contrast to Monday, today's calendar is very extensive. Just before noon the investors will get to know the February data on the balance of trade (forecast: -8 million GBP) and the March report on CPI (forecast: 4.4% yoy) in the UK, as well as the ZEW index April (forecast: 12 points). In the afternoon, published will be  the U.S. trade balance in February (forecast: -44.4 billion dollars) and import prices in March (forecast: 2.2% mom). Today, the Bank of Canada  will also take decision about the interest rate (the market does not expect the changes).

Yesterday Alcoa opened earnings season on Wall Street. In the first quarter of 2011 Alcoa earned $308 million in comparison to $201 million net loss in the first quarter of 2010 and to $258 million profit in the fourth quarter of 2010. Earnings per share(28 cents) were slightly better than market expectations (27 cents). However, the revenue was disappointing. It rose to $5.96 billion, but the market expected growth to $6.14 billion. That is why Alcoa fell 3% during the after-hours trading session.        

Pawel Kordala

Disclaimer, investment risk warning
X-Trade Brokers Dom Maklerski S.A. does not take responsibility for investment decisions made under the influence of the information published on this website. more