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Market Outlook 1st - 5th August PDF Print E-mail

Market Outlook

- WALL STREET:
US indices declined sharply last week on concerns about the US debt ceiling negotiations. Looking at economic releases, US 2Q GDP rose 1.3% (+1.8% expected) vs +0.4% in 1Q11. Pending home sales increased 2.4% in June (-2% expected) The Federal Reserve report showed that the pace of the economic recovery slowed in June. Also, looking at corporate results, ConocoPhillips reported $3.4B adjusted earnings compared with 2Q10 adjusted earnings of $2.5B. All sectors lost ground last week, automobiles and components recorded the weakest performance (-7.82%), while commercial and professional services and capital goods fell by over 6%. From a chartist view, the S&P500 index is still trading between 1267 and 1370. The technical indicators are mixed to bullish, calling for a limited rebound.

- EUROPE:
In the UK, the FTSE 100 declined 2.02% over the past week. From a technical view, the index is now pulling back on its support area. A technical rebound is therefore expected in the coming days towards 6100 (the upper boundary of its MT range). On the economic front, GfK consumer confidence survey fell to -30 in July vs -25 in June and -26 anticipated by economists. In the rest of Europe, all major European indices tumbled. The FTSE MIB index fell by 5.28% while the SMI lost 4.12%. Euro zone CPI estimate were up 2.5% YoY in July vs +2.7% in June. Separately, Moody's placed Spain's Aa2 credit rating on review for a possible downgrade. S&P's downgraded again Greece's debt rating to "CC" from "CCC" with a "negative" outlook unchanged. Looking at sectors, all sectors ended into negative territory except from telecommunications (+1.27%). Automobiles and parts, banks and insurance lost most and declined by appx. 4%. Technically, the Stoxx 600 is very close to its support threshold at 262, which may call for a limited technical rebound to 273.25 and 275.5 in extension.

  August 1st - August 5th

 Market Round up

 

Weekly chg (%)

Last

Dow Jones

-4.2

12143.2

Nasdaq 100

-2.7

2362.8

Dax Xetra

-2.3

7158.8

Cac 40

-4.4

3672.8

border=0 Foreign Exchange

Euro/dollar : the pair has failed to break below its support and thus remains on the upside, the RSI is supported by a rising trend line. LONG above 1.395 towards 1.4700 & 1.4900.

Dollar/yen : the pair has broken below its support and is approaching its previous low. SHORT below 81.60 with 76.50 or even 75.30 in sight.

Company preview

border=0 Barclays (GBp 223 ; -6.93% ; BARC ; BARC.L)
On Tuesday, Barclays is expected to deliver 1H pre-tax profit of around £2.7B, compared to £2.1B a year earlier. Recently, the bank may consider setting up £500M UK infrastructure fund, according to Times' report. Earlier, the bank's price target was cut to 320p from 350p at Exane BNP Paribas (the "outperform rating unchanged). From a technical view, the stock is still capped by a declining 50-day moving average. Even though a ST technical rebound cannot be ruled out, its extent should be limited below 250p.

border=0 Porsche Pref (EUR 53.68 ; -6.32% ; PAH3 ; PSHG_p.DE)
On Wednesday, Porsche Automobil Holding may announce its 1H11 results. The same period last year, the Co posted net income of E957M. Earlier, the European car manufacturer said June sales up nearly 30% YoY to 10,677 vehicles. From a chartist view, the share price is pulling back to its support area around E50, which should be tested in the coming days before any further upsides to E60 and E65.

border=0 Rio Tinto (GBp 4300 ; -2.75% ; RIO ; RIO.L)
On Thursday, Rio Tinto, the international mining giant, could post 1H net profit of around $8.7B compared with $5.8B a year ago. Earlier, the Co reported 2Q global iron ore production up 12% YoY to 49M tons attributable (62M tons on a 100% basis) and forecast FY iron ore production to be over 240M tons (on a 100% basis). Technically, the stock remains within the MT trading range between 4000p and 4600p, and may re-test the upper boundary at first after a ST pause.

border=0 Kraft Foods (USD 34.38 ; -2.96% ; KFT ; KFT.N)
On the same day in the US, Kraft Foods, a food and beverage company, is expected to unveil 2Q EPS of appx. $0.58 compared to $0.6 last year on sales of $13.1B vs $12.2B. Recently, the Co announced Michael A. Clarke, Executive Vice President and President, Kraft Foods Europe, will leave the company in mid-August, and will be replaced by Timothy P. Cofer. Graphically, the stock price has just broken below a MT rising support, and is now under pressure below $35. Hence, a new pullback seems more likely towards $33.

border=0 Procter & Gamble (USD 61.49 ; -4.3% ; PG ; PG.N)
On Friday, Procter & Gamble, the worldwide consumer products manufacturer, may report 4Q EPS of $0.82 compared with $0.71 a year ago on sales of $20.6B vs $18.9B. Earlier, the Co was downgraded to "hold" from "buy" at Jefferies. From a technical point of view, the stock price extended its loss last week and also broke below its previous support at $62.5. Nevertheless, the technical indicators are deeply "oversold", calling for a limited technical rebound towards $63.

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

 

Corporate Calendar August 1st - August 5th

Date

Market

Company

Event

border=0 Monday, August 1st

 

FR

Air Liquide

1st-Half results

 

GE

MTU Aero Engines Holding

2nd-Quarter results

 

NE

TNT Express

2nd-Quarter results

 

UK

HSBC

1st-Half results

 

US

Humana

2nd-Quarter results

 

US

Loews Corp

2nd-Quarter results

border=0 Tuesday, August 2nd

 

FR

BNP Paribas

2nd-Quarter results

 

GE

BMW

2nd-Quarter results

 

GE

Metro

2nd-Quarter results

 

UK

Barclays

1st-Half results

 

UK

Xstrata

1st-Half results

 

US

Pfizer

2nd-Quarter results

border=0 Wednesday, August 3rd

 

FR

Société Générale

2nd-Quarter results

 

GE

Porsche Pref

1st-Half results

 

IT

Enel

1st-Half results

 

UK

Standard Chartered

1st-Half results

 

UK

Taylor Wimpey

1st-Half results

 

US

Time Warner

2nd-Quarter results

border=0 Thursday, August 4th

 

FR

Axa

1st-Half results

 

GE

Deutsche Telekom

2nd-Quarter results

 

UK

Lloyds Banking Group

1st-Half results

 

UK

Rio Tinto

1st-Half results

 

UK

Unilever

1st-Half results

 

US

Kraft Foods

2nd-Quarter results

border=0 Friday, August 5th

 

GE

Allianz

2nd-Quarter results

 

IT

Generali

1st-Half results

 

UK

Royal Bank Of Scotland Group

1st-Half results

 

UK

Prudential

1st-Half results

 

US

Procter & Gamble

4th-Quarter results

 

US

Viacom

3rd-Quarter results

 

Economic Calendar (CET) August 1st - August 5th

Date

Market

Economic data

Period

Expected

Last

border=0 Monday, August 1st

11:00:00

EC

Euro-Zone: Unemployment Rate

JUN

NA

9.9%

16:00:00

US

Construction Spending (MoM)

JUN

0%

-0.6%

16:00:00

US

ISM - Manufacturing

JUL

55

55.3

16:00:00

US

ISM - Price Paid

JUL

63

68

border=0 Tuesday, August 2nd

11:00:00

EC

Euro-Zone: PPI (MoM)

JUN

NA

-0.2%

14:30:00

US

Personal Income

JUN

0.2%

0.3%

14:30:00

US

Personal Spending

JUN

0.2%

0%

23:00:00

US

Total Vehicule Sales (Mln)

JUL

11.87

11.41

23:00:00

US

Domestic Vehicule Sales (Mln)

JUL

9.27

8.95

border=0 Wednesday, August 3rd

11:00:00

EC

Euro-Zone: Retail Trade (MoM)

JUN

NA

-1%

16:00:00

US

Factory Orders

JUN

0%

0.8%

16:00:00

US

ISM - Non Manufacturing

JUL

53.9

53.3

16:30:00

US

Crude Oil Inventories (WoW chg)

W30

NA

2296

border=0 Thursday, August 4th

13:00:00

UK

BoE: Rates decision

 

0.5%

0.5%

13:45:00

EC

ECB: Rates decision

 

1.5%

1.5%

border=0 Friday, August 5th

08:45:00

FR

Trade Balance (Mln)

JUN

NA

-7422

10:30:00

UK

PPI - Output (MoM)

JUL

NA

0.1%

12:00:00

GE

Industrial Production (MoM)

JUN

NA

1.2%

14:30:00

US

Unemployment Rate

JUL

9.2%

9.2%

14:30:00

US

Change in Nonfarm Payrolls (Thsd)

JUL

92.44

18

14:30:00

US

Change in Manufact. Payrolls (Thsd)

JUL

14

6


 


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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