Dow May Weaken on Earnings Fears

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LONDON -- U.S. stocks look set to continue Friday's losses when trading starts this morning, with futures markets expecting the Dow Jones Industrial Average (INDEX: ^DJI) to open down by about 0.5%. The index closed almost 1% lower on Friday following disappointing nonfarm payroll figures.

Overnight news from Asia may add pressure to the markets, especially for resource shares. Chinese Premier Wen Jiabao admitted yesterday that the Chinese economy remains under "relatively large" downward pressure, while in Japan, new data showed that machinery orders fell by 15% in May, the biggest drop since 2001.

Today's domestic news also looks unlikely to provide much cheer. Earnings season gets underway tonight, with Alcoa (NYS: AA) , WD-40, and PriceSmart all due to publish quarterly figures after the close. Alcoa's earnings will be of particular interest. The company's share price lost 1% in premarket trading amid concerns over falling profitability. The only economic data due today are the latest consumer credit figures, expected at 3 p.m. EDT.


In Europe, eurozone finance ministers will meet later today to try to decide how to implement the deal agreed at last month's EU summit. Concerns over a likely lack of progress were reflected in the bond markets this morning, where yields on Spanish 10-year bonds rose to 7.1% and 3.29 billion euros of German new six-month debt sold for a negative yield of -0.034% as investors sought a safe haven for their cash.

European markets opened slightly down this morning, although most had recovered somewhat by lunchtime, with Germany's DAX and Italy's FTSE MIB breaking into positive territory by 7 a.m. EDT. Spain's IBEX 35 was the biggest loser and was down by more than 1% at the end of the morning. In London, the FTSE 100 (INDEX: ^FTSE) was around 0.25% lower at the end of the morning session. Clothing brand Burberry led the fallers with a 2.95% drop, while Royal Bank of Scotland Group bucked the trend to top the leaderboard with a 2% gain.

Neither Burberry nor RBS was the FTSE 100 share chosen by billionaire investor Warren Buffett, who recently spent more than $1 billion to increase his holding in another major U.K. blue chip to more than 5%. The company in question is going through a tough patch at the moment but has global expansion potential and a strong dividend record -- two factors sure to have attracted the legendary investor. You can find out the identity of the company and the price paid by Buffett in this special free report.

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