Asian markets declined for a second consecutive day on the expectation that upcoming earning season is likely to be poor. U.S. futures also moved lower during the Asian session, widening the declines seen in the spot market.
Investors are evaluating the influence of the credit crisis and weighing that with the expected downturn in quarterly earnings. The earning season kicked-off with Alcoa, the biggest U.S. aluminum producer, posting a second quarterly loss. The company loss was 59 cents per share in the first quarter, slightly bigger than what analysts had forecasted.
Consequently, commodity stocks drove the main markets lower in Europe and U.S. on Tuesday. The S&P 500 closed the day 19.93 points (2.39%) lower, while in Europe, the U.K. Ftse index fell 63.02 points (1.58%), erasing some early gains. The U.K. Ftse exposure to the Alcoa’s results was even greater since an important number of companies listed in the U.K. Ftse operate in the commodity market.
The effects of the credit crisis have not only been seen in company’s balance sheets, but also in the government’s statistics. Tonight, the Japanese current account surplus shrank 55.6% in February from one year earlier as exports plunged 50.4%. However, the current account still records a surplus since imports also plunged at a similar rate.TheLFB-Forex.com Trade Team notes “The huge decline in Japan’s export markets denotes problems for the Japanese companies, mostly because their exposure to foreign demand. Japan’s companies saw large bulks of orders coming from foreign countries in the past, but these are not there anymore.”
Overnight, the Nikkei fell 138.29 points (1.57%) to 8,694.55. The Australian S&P/Asx slipped 59.10 points (1.59%) to 3,647.30.
Crude oil posted significant declines as equity markets sold off. Crude for April delivery fell $1.00 to $48.15.
Gold rose on Tuesday for the first time in the last few days. Bullion for immediate delivery rose $1.00 to $883.40.