US shares fell overnight led by Wells Fargo. A late sell-off in financial stocks was triggered after an analyst cut his investment rating on the company, saying the quality of its earnings was pretty poor. The Federal Reserve's latest beige book, showing weak consumer spending during late summer, also weighed down the market.
Wall Street closed flat yesterday after the market rallied for two days. Traders turned cautious before the third quarter earnings kick off. Alcoa (NYSE:AA), the first company to unveil its earnings, posted a better-than-expected result with third quarter net income of US$77 million, after three consecutive quarters of losses.
Overnight Wall Street was lower for a second consecutive session on a weak home sales report. The National Association of Realtors said sales of existing homes fell 2.7 per cent in August to an annual rate of 5.10 million units, breaking a string of four increases in six months. The surprise drop in home sales raised more concerns over the economy recovery strength.
US markets were closed for the Labour Day public holiday, while Europe and Asia markets posted strong gains on Monday.
Yesterday the Australian shares were showing their resilience to the bad leads from overseas. The market ended with a modest drop after a rebound from the early losses. The benchmark S&P/ASX 200 ended down 0.6%, or 19.6 points, at 3331.6, while the broader All Ordinaries index also fell 0.6%, or 19.1 points, to 3285.
On Friday the Australian stock market ended higher on the recovery in mining sector. The benchmark S&P/ASX200 index closed up 21.4 points, or 0.61%, at 3550.9, while the broader All Ordinaries gained 18.1 points, or 0.52%, to 3494.9. Analysts expect the market may keep its way of turbulence in the reporting season until some clarity of the economy could be seen. Tomorrow Barack Obama's inauguration will be the focus of the week to boost some confidence in the market.