US reporting season gets underway: Midday Roundup

The all-important US reporting season got off to a so-so start, with Alcoa reporting a profit in line with expectations, but revenue that was not.

Back home, investors seemed keen to take profit after yesterday’s 12-month high, and were helped by an announcement from iron ore giant Fortescue Metals Group blaming heavy rains for a 16% fall in quarterly shipping volumes.

Falls in BHP Billiton and Woodside Petroleum, the subject of much takeover talk over the past two days, also dragged down the market.

And overnight the International Monetary Fund sliced its Australian growth rate to 3% in 2011, from 3.5%, noting the impact of the eastern seaboard flooding but saying this would be offset by stronger private investment in mining and stronger commodity exports.

On the bright side, the big banks were higher, and National Australia Bank’s monthly business survey shows business conditions have reached a one-year high.

At 11.37 AEST, the benchmark ASX/S&P 200 was trading 0.74% to 4934.5, below the key 5000-point mark, while the broader All Ordinaries index was down 0.8% to 5022.8.

Lofty heights tipped for Australian dollar

Despite a rise in the US dollar overnight putting pressure on the local economy, there are predictions the Australian dollar could reach yet another post-float high.

The Australian dollar opened half a US cent weaker this morning, hurt by lowered oil prices and recovery in the greenback.

While NAB expects the Australian dollar to peak at $US1.05, having already reached $US1.0588 on the weekend, others are keeping an eye on developments in the US.

At just after midday, the Australian dollar was slightly higher against the US dollar at $US1.0456.

Oil prices, European stocks slip

Overnight, oil prices slipped from 32-month peaks after Goldman Sachs encouraged investors to take profits and International Monetary Fund warnings that strong oil prices posed a risk to the world economy, though a containable one.

European shares were weaker, led by Leighton Holdings-shareholder Hoctheif, which delivered a profit warning.

After reaching a five-week high last week, the pan-European FTSEurofirst 300 index slipped 0.2% to close at 1,146.35 points overnight.

“Investors want to look through some of the issues we’ve had, like Libya, and take more risk,” David Rickards, global co-head of equity research at Macquarie in London, told Reuters. “European valuations still look good.”

Wall St flat, but profits seen rising

Lower oil prices also had an effect on US-listed energy shares, with companies hit by profit-taking overnight.

The Dow Jones industrial average was flat at 12,381.11, while the Standard & Poor’s 500 Index dropped 0.28% to 1,324.46 and the Nasdaq shed 0.32% to 2,771.51.

The S&P is more than 5% this year, with profits seen rising 11.4% from a year ago, according to Thomson Reuters data.