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Market Outlook - 12th - 16th September PDF Print E-mail

Market Outlook

- WALL STREET:
US indices tumbled last week. On the economic front, ISM Non-Manufacturing index rose to 53.3 in August (51 expected) while US trade deficit declined to $44.8B in July from $51.6B in June. Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss tools to boost the recovery at their next meeting this month, and stand ready to use them if necessary. Looking at US companies, Bank of America may cut about 40,000 jobs according to the WSJ while Texas Instruments cut its 3Q revenue guidance. All sectors lost ground last week. Diversified financials, automobiles & components fell over 7% while utilities, household and personal products, retailing retreated by more than 2%. From a technical point of view, the S&P500 index is pulling back below its 20D MA, and should test its support base around 1125-1100 in the forthcoming days.

- EUROPE:
In the UK, the FTSE 100 declined 1.46% on the week. Graphically, the ST outlook is still mixed, and the index may continue to move within its sideways pattern between 5445 and 4800 until a decisive break-out or break-down from the range happens. Looking at economic data, UK PMI services fell to 51.1 in August vs 55.4 in July. The BOE and the ECB left their benchmark rate unchanged at 0.5% and 1.5% respectively. Germany’s trade balance in July was +E10.4B vs +12.7B in June. Most European indices ended in negative territory. The DAX , the FTSE MIB and the IBEX lost over 6% while the CAC 40 fell 5.52% and the SMI gained 1.33%. Looking at companies, Porsche Volkswagen will delay their merger.All sectors finished lower last week, except from oil and gas (+0.53%). Automobiles and parts, insurance, banks, construction and materials posted the worst performance, losing more than 6.5%. Technically, the Stoxx 600 index stands below its key resistance at 240, and is more likely to re-test the support base around 220-215 in sight, if break down, look for further downsides towards 195.

 

  September 12th - September 16th

 

border=0 Market Round up

 

Weekly chg (%)

Last

Dow Jones

-4.4

5214.7

Nasdaq 100

-2.5

2163.7

Dax Xetra

-6.3

5189.9

Cac 40

-1.5

5214.7

border=0 Foreign Exchange

Euro/dollar : the pair has broken below a MT rising trend line and is expected to seesaw between 1.395 & 1.34. SHORT below 1.395 with 1.34 & even 1.305 in sight.

Dollar/yen : the pair remains under pressure and is challenging its previous low. SHORT below 79.5 with 75.95 or even 73.75 in sight.

Company preview

border=0 Ashmore Group (GBp 398.2 ; -1.53% ; ASHM ; ASHM.L)
On Tuesday, Ashmore Group, the UK-based fund manager, is expected to release FY pre-tax profit of £244M compared with £217M a year ago. Recently, the Co and Bunzl were being added to the FTSE 100 Index to replace John Wood Group Plc and 3i Group Plc. Last week, the stock was downgraded to "hold" from "buy" at Deutsche Bank. Technically, the share price has just broken above its YTD high, being supported by its bullish 50D MA. Hence, further advance seems likely to 450p and 475p in extension.

border=0 Best Buy (USD 24.5 ; -1.17% ; BBY ; BBY.N)
The same day in the US, Best Buy Co, the retail giant, may announce 2Q EPS of appx. $0.53 compared to $0.6 a year earlier on sales of $11.5B vs $11.3B. Earlier, the Co launched new online Marketplace to provide a broader selection of products and brands on BestBuy.com and complements the existing online offering. Recently, the Co's price target was cut to $30 from $35 at JPMorgan (with the "neutral" rating unchanged). Graphically, the stock remains under pressure below its key resistance around $25.50, and a new pullback is therefore, expected towards $20 after a ST consolidation.

border=0 Barratt Developments (GBp 73.35 ; -6.5% ; BDEV ; BDEV.L)
On Wednesday, Barratt Developments, the UK homebuilder, could post FY pre-tax profit of £38.6M compared to a loss before tax of £118M a year ago on revenues of around £2B, almost in line YoY. Earlier, the Co was in talks to sell its first tranche of shared-equity loans, according to Financial Times. Last week, the Co's price target was cut to 87p from 116p at Credit Suisse (the "neutral" rating unchanged). Technically, the stock consolidates above the 70p threshold, and may re-test this support in the coming days. The risk now is a slide below 70p, which should trigger a new sell-off to 65p at first.

border=0 Next (GBp 2312 ; 0.35% ; NXT ; NXT.L)
On the same day, Next Plc is expected to deliver 1H pre-tax profit of £224M compared with £155M a year ago on sales of £1.6B vs appx. £1.59B. Last week, the Co was upgraded to "outperform" from "neutral" at Macquarie. During the same period, Fitch Ratings upgraded the Co's ST Issuer Default Rating to "F2" from "F3" with a "stable" LT outlook. From a chartist view, the stock is relatively strong compared to its benchmark index, and should challenge its YTD high at 2435 in the coming days.

border=0 Kingfisher (GBp 232.4 ; 2.38% ; KGF ; KGF.L)
Thursday, Kingfisher, the UK retailer of home improvement goods, may report 1H pre-tax profit of £405M compared with £250M a year earlier on sales of around £5.6B vs £5.5B. Recently, the Co planned to invest £150M in 9 new Castorama shops in Russia. The Co's price target was raised to 320p ("buy") from 310p ("neutral") at Nomura. From a technical view, the stock is capped by its resistance area around 240, representing both a key horizontal level and the current 50D MA. In which case, the upside potential should be limited before further decline to 220p and 200p, as long as 240 is not surpassed.

Selection of those events which may affect the stock prices of international Large Caps


Corporate Calendar September 12th - September 16th

Date

Market

Company

Event

border=0 Monday, September 12th

   

No major results expected

 

border=0 Tuesday, September 13th

 

SW

Elekta Instrument

1st-Quarter results

 

UK

Ashmore Group

annual results

 

US

Best Buy

2nd-Quarter results

border=0 Wednesday, September 14th

 

UK

Barratt Developments

annual results

 

UK

Next

1st-Half results

 

US

Pall

4th-Quarter results

border=0 Thursday, September 15th

 

UK

Dunelm Group

annual results

 

UK

Kier Group

annual results

 

UK

Kingfisher

1st-Half results


Economic Calendar (CET) September 12th - September 16th

Date

Market

Economic data

Period

Expected

Last

border=0 Monday, September 12th

   

No major economic event

     

border=0 Tuesday, September 13th

07:30:00

FR

Consumer Price Index (MoM)

AUG

NA

-0.4%

08:45:00

FR

Current Account (Mln)

JUL

NA

-3.4

10:30:00

UK

CPI - EU Harmonised (MoM)

AUG

NA

0%

10:30:00

UK

Trade Balance Non EU25 (Mln GBP)

JUL

NA

-5718

10:30:00

UK

Visible Trade Balance (Mln GBP)

JUL

NA

-8873

20:00:00

US

Monthly Budget Satement (Bln)

AUG

NA

-129.4

border=0 Wednesday, September 14th

10:30:00

UK

Unemployment Rate (ILO)

JUL

NA

7.9%

11:00:00

EC

Euro-Zone: Industrial Production (MoM)

JUL

NA

-0.7%

14:30:00

US

Producer Price Index (MoM)

AUG

0%

0.2%

14:30:00

US

Retail Sales

AUG

0.2%

0.5%

14:30:00

US

Retail Sales less Autos

AUG

0.2%

0.5%

16:00:00

US

Business Inventories

JUL

0.5%

0.3%

border=0 Thursday, September 15th

10:30:00

UK

Retail Sales (MoM)

AUG

NA

0.2%

11:00:00

EC

Euro-Zone: CPI (MoM)

AUG

NA

-0.6%

14:30:00

US

Consumer Price Index (MoM)

AUG

0.2%

0.5%

14:30:00

US

Empire Manufacturing

SEP

-2.6

-7.7

15:15:00

US

Industrial Production (MoM)

AUG

0.05%

0.91%

16:00:00

US

Philadelphia Fed.

SEP

-14.3

-30.7

border=0 Friday, September 16th

10:00:00

EC

Euro-Zone: Current Account (Bln) (MoM)

JUL

NA

-3.3

11:00:00

EC

Euro-Zone: Trade Balance (Bln)

JUL

NA

919.3

11:00:00

EC

Euro-Zone: Trade Balance (Bln) (MoM)

JUL

NA

919.3

15:55:00

US

U. of Michigan Confidence

AUG

56.6

55.7


 


This document does not constitute financial advice. If you require such advice, you should seek appropriate professional advice. Internaxx accepts no responsibility for the content of this newsletter.

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