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Market Outlook - 3rd - 7th October PDF Print E-mail

Market Outlook

- WALL STREET:
US indices were mixed last week. The DJIA index gained 1.32% while the S&P500 and the Nasdaq lost ground. Looking at economic releases, Chicago Purchasing Manager index rose to 60.4 (55.0 exp.) in September. US economy grew at 1.3% in the second quarter according to data released by the Commerce Department. Also, initial jobless claims declined to 391,000 for the week ended 24th September. Looking at US stocks, Berkshire Hathaway announced a share repurchase program. Looking at sectors, insurance, commercial & professional services, telecommunications and banks rose most while consumer durables and semiconductors fell by over 4%. From a chartist view, the S&P500 index remains deeply under pressure below its bearish 50D MA. The risk is a slide below 1025 (the nearest support), which should trigger a strong sell-off towards 1040.

- EUROPE:
In the UK, the FTSE 100 rose 1.22% on the week. Technically, the index failed to break above its downside 50D MA, and is now expected to pull back to test its major support at 4800 in the coming days. On the economic front in UK, CBI reported sales fell to -15 in September, a 16-month low, as anticipated by consensus, vs -14 in August. In Europe, euro zone unemployment rate was 10% in August, unchanged MoM while retail sales in Germany dropped 2.9% in August (-0.5% exp.). Also German parliament's lower house backed enhanced euro rescue fund. All Europan indices rallied last week. The CAC 40, the IBEX, the DAX gained over 5% and the FTSE MIB rose 8.57%. Apart from financial services (-0.05%), all European sectors bounced last week. Insurance (+12.19%) posted the best performance, followed by banks (+8.5%), utilities (+7.7%) and construction & materials (+6.1%). Technically, the Stoxx 600 index struck against its key resistance at 233, and should post a new down move towards 195.

  October 3rd - October 7th

border=0 Market Round up

 

Weekly chg (%)

Last

Dow Jones

1.3

10913.4

Nasdaq 100

-3.1

2139.2

Dax Xetra

5.9

5502

Cac 40

6.1

2982

border=0 Foreign Exchange

Euro/dollar : the pair remains under pressure and is approaching its next support. SHORT below 1.4200 with 1.3325 & even 1.2965 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 Yum! Brands (USD 49.39 ; -4.39% ; YUM ; YUM.N)
On Tuesday, Yum! Brands, the owner of worldwide quick-service restaurants, is expected to deliver 3Q EPS of $0.82 compared to $0.73 a year earlier on sales of appx. $3.1B vs $2.9B. Recently, the group signed agreements to sell its Long John Silver's restaurants to LJS Partners LLC and the A&W All-American Food chain to A Great American Brand LLC. Earlier, the Board approved a 14% increase in the Co's quarterly dividend from $0.25 to $0.285 per share. Technically, the stock is approaching its key support at $47.5, and a test should be in sight before any further downsides to $46.30.

border=0 Tesco (GBp 378 ; 3.5% ; TSCO ; TSCO.L)
On Wednesday, Tesco, the UK-based food retail giant, may announce 1H pre-tax profit of £1.75B compared with appx. £1.6B last year on revenues of £31.9B vs around £30B. Recently, the Co would be interested in bidding for Poland's Emperia's retail units, according to Reuters. Last week, the Co was downgraded to "underperform" from "neutral" at Exane BNP Paribas. From a chartist view, the stock price is still trading within the range pattern between 385p and 360p, and may challenge the upper boundary after a ST consolidation.

border=0 Costco Wholesale (USD 82.13 ; -1.49% ; COST ; COST.O)
The same day, Costco Wholesale, the largest US warehouse-club chain, could unveil 4Q EPS of around $1.1 compared to $0.97 a year ago on sales of $27.7B vs $24.1B. Recently, the Co was rated "buy" at Deutsche Bank with a price target at $89. Earlier, the Co appointed COO Craig Jelinek to succeed CEO Jim Sinegal, who will step down on Jan. 1. From a technical view, the bias remains bullish on a MT view. Nevertheless, the stock might be forming a ST "double-top" pattern, and the downside breakout of $82 (the neckline) would call for a ST pullback to $78.

border=0 Monsanto (USD 60.04 ; -5.66% ; MON ; MON.N)
Wednesday, Monsanto, the US agricultural products provider, is expected to post a 4Q LPS of $0.27 compared to the loss of $0.13 per share a year ago on sales of around $1.9B vs around $2B. Last week, the Co expected 2Q potash sales volumes of 1.7m-2m tonnes at avg price $440-$465/tonne, phosphate sales of 3.1m-3.5 tonnes at avg selling price $600m-$625m. Besides, the Co acquired Beeologics, a targeted-pest control technology company. From a technical point of view, the price has just broken below its key MT level at $63. Hence, a further decline seems more likely in sight towards $55.

border=0 Constellation Brands (USD 18 ; 2.16% ; STZ ; STZ.N)
On Thursday, Constellation Brands, the world's leading premium wine company, could report its 2Q results, before the open of the US markets. The analysts expect 2Q EPS of $0.66 compared with $0.52 a year ago on sales of $665M vs $862M. Last week, the Co's price target was cut to $21 from $24 at Citigroup (the "hold" rating unchanged). From a chartist view, the stock remains capped by its declining 50D MA since the end of May 2011. Therefore, further downsides will probably occur towards $16.5, as long as $19 is not surpassed.

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


Corporate Calendar October 3rd - October 7th

Date

Market

Company

Event

border=0 Monday, October 3rd

   

No major earnings expected

 

border=0 Tuesday, October 4th

 

UK

Wolseley

annual results

 

US

Yum! Brands

3rd-Quarter results

border=0 Wednesday, October 5th

 

SW

Industrivarden

3rd-Quarter results

 

UK

Tesco

1st-Half results

 

US

Costco Wholesale

4th-Quarter results

 

US

Marriott International

3rd-Quarter results

 

US

Monsanto

4th-Quarter results

border=0 Thursday, October 6th

 

US

Constellation Brands

2nd-Quarter results

border=0 Friday, October 7th

   

No major earnings expected

 


Economic Calendar (CET) October 3rd - October 7th

Date

Market

Economic data

Period

Expected

Last

border=0 Monday, October 3rd

16:00:00

US

Construction Spending (MoM)

AUG

0%

-1.3%

16:00:00

US

ISM - Manufacturing

SEP

49.8

50.6

16:00:00

US

ISM - Price Paid

SEP

NA

55.5

23:00:00

US

Total Vehicule Sales (Mln)

SEP

12.32

12.1

23:00:00

US

Domestic Vehicule Sales (Mln)

SEP

9.61

9.52

border=0 Tuesday, October 4th

11:00:00

EC

Euro-Zone: PPI (MoM)

AUG

NA

0.5%

16:00:00

US

Factory Orders

AUG

0.2%

2.4%

border=0 Wednesday, October 5th

10:30:00

UK

GDP (QoQ)

2Q

NA

0.2%

10:30:00

UK

Current Account (Bln)

2Q

NA

-9.354

11:00:00

EC

Euro-Zone: Retail Trade (MoM)

AUG

NA

0.3%

16:00:00

US

ISM - Non Manufacturing

SEP

53

53.3

16:30:00

US

Crude Oil Inventories (WoW chg)

W39

NA

1915

border=0 Thursday, October 6th

13:00:00

UK

BoE: Rates decision

 

0.5%

0.5%

13:45:00

EC

ECB: Rates decision

 

NA

1.5%

border=0 Friday, October 7th

08:45:00

FR

Trade Balance (Mln)

AUG

NA

-6460

10:30:00

UK

PPI - Output (MoM)

SEP

NA

0.1%

12:00:00

GE

Industrial Production (MoM)

AUG

NA

4%

14:30:00

US

Unemployment Rate

SEP

9.1%

9.1%

14:30:00

US

Change in Nonfarm Payrolls (Thsd)

SEP

49.48

0

14:30:00

US

Change in Manufact. Payrolls (Thsd)

SEP

-5

-3


 


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.

INTERNAXX TRADING

 

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