US earnings expected to have main impact

Yahoo chief executive Marissa Mayer is one of the several technology company chief executives to...
Yahoo chief executive Marissa Mayer is one of the several technology company chief executives to report improved earnings this week. Photo by Reuters.

Second-quarter earnings from United States listed companies were likely to have the largest impact on markets this week, Craigs Investment Partners broker Chris Timms said yesterday.

Alcoa and Wells Fargo, among others, started things off last week but this week, about 55 Standard & Poor's 500 companies will report.

Citigroup, Goldman Sachs, JPMorgan, Bank of America, Morgan Stanley and Blackrock were the financial companies expected to report.

However, there was also a healthy showing of high-profile technology companies such as Google, IBM, Intel and Yahoo all due to report, he said.

Overall, second-quarter earnings were expected to grow about 6%. Financial companies were expected to be the weakest and technology stocks the strongest.

The technology sector had the highest projected earnings growth rate among the 10 S&P sectors for the second quarter at 12.3%, its best quarter since the first quarter of 2012. The forecast marked a strong rebound from a drop of 3.2% just a year ago, Mr Timms said.

The Dow Jones Industrial Average and the S&P 500 had both hit record highs recently but the technology-rich Nasdaq was still 700 points away from its intraday high on March 10, 2000, suggesting to some investors the sector might have more room to the upside.

Analysts were expecting subdued results for financial companies because a slow down in revenue from mortgage refinancing and trading was offsetting gains from other areas, such as investment banking and money management, he said.

''A bigger focus will be on the outlook for the second six months of the year. Most people are expecting a strong bounce in activity, with earnings growth estimates for the second half rising to more than 10%.''

With equity markets close to all-time highs, a disappointing earnings season was one of the largest risks in the immediate future, Mr Timms said.

Also tomorrow, Chinese economic growth figures for the June quarter were due, he said.

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