Early tomorrow morning, our time, Alcoa kicks off the March quarter earnings reporting season.
But some of the big Wall Street banks will dominate, starting with JPMorgan Chase next Wednesday, then Bank of America on Thursday, following by Well Fargo and Citigroup on Friday, plus the huge financial manager, Blackrock as well.
Banks like Morgan Stanley and Goldman Sachs are due to report next week.
Delta is the first of the giant US airlines to report midway through next week and its results will tell us if the surge in airline profits (thanks to the fall in oil prices) has continued.
Still in transport and CSX, one of America’s largest railway groups, is due to report tonight, our time, after Alcoa.
Alcoa shares closed down 1.2% on Friday night, our time. Although they are up 39% since closing at a near seven-year low of $US6.74 on January 19, they had still lost 5.1% year to date. The wider market is line ball with the start of the year.
S&P Global Market Intelligence says earnings of companies listed on the S&P 500 are expected to decline 8.1% to $US26.17 a share in the first three months of the year, from the same quarter in 2015.
Energy (oil, gas,coal) is once again expected to lead the way with an estimated 105% drop in profits as the continuing slide in crude oil and gas prices, and weak coal prices (more than a dozen big coal companies have gone bust in the past two years) take a toll on the energy sector. S&P Global says the S&P 500 financial sector could report a 6.1% drop in earnings from the same quarter of 2015 as the continuing weakness in the trading business is expected to drag on the bottomline.
The AMP’s Chief Economist, Dr Shane Oliver says that “With consensus estimates expecting an 8-9% year on year fall in profits there is some scope for upside surprise (in earnings).”
It has to be remembered though the slide in the value of the US dollar in March could help some of the big multinational companies report slightly improved earnings and sales from offshore, and lift guidance in hope the greenback continues weakening.
Apart from the fed’s moves on rates, the earning season and the value of the dollar (tied to the Fed’s decision this month), will be the big driver of US share prices in the next few months.
This assumes there will be no agreement at the Opec meeting next Sunday to cap production – if there is a lot could change.
