What Will Drive Alcoa’s April Performance?
Respite for Alcoa as the Fed Lifts Sentiments Yet Again
Alcoa’s April performance
Alcoa (AA) has traded largely sideways in March 2016 and has been consolidating around the $10 price level. Alcoa has recouped its 2016 losses and is trading ~36% above its January lows. Nonetheless, it’s trading at a year-to-date loss of 1.5%.
In this part of the series, we’ll look at some of the key factors that will drive Alcoa’s performance in April.
China
China’s PMI (purchasing managers’ index), scheduled to be released on April 1, 2016, will shed light on the country’s manufacturing slowdown. Notably, China’s slowdown was a primary factor sending base metals (DBB) prices to multiyear lows earlier this year.
China’s manufacturing PMI, released by Markit, has been below 50 for the last year, as can be seen in the graph above. China’s slowdown has negatively impacted miners including BHP Billiton (BHP), Rio Tinto (RIO), and Glencore (GLNCY).
The next indicators to watch will be China’s trade data that are expected on April 8. Though Chinese aluminum exports fell in the first two months of fiscal 2016, it will be interesting to see if aluminum exports were lower in March as well.
Earnings
Alcoa is scheduled to release its 1Q16 financial results on April 11, 2016. Alcoa’s earnings will provide insight into how the company is doing amid multiyear low commodity prices.
A key event that could drive Alcoa’s 2016 price movement is the company’s impending split. The Market will look for more updates on this from Alcoa’s management during its 1Q16 earnings conference call.
You can find out more about Alcoa’s post-split valuation in Market Realist’s series Alcoa’s Post-Split Valuation: A Look at the Drivers.
You can visit Market Realist’s Aluminum page to follow the latest updates in this industry.
You can also read Will Alcoa Splitting into 2 Companies Add Shareholder Value? to find out the strategic rationale for the split.
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