Market Outlook August 23rd - August 27th Print

 

Market Outlook

- WALL STREET:

US Indices closed mixed last week, with the Nasdaq 100 gaining limited ground while the Dow Jones and the S&P 500 eased -0.87% and -0.7% respectively. On the economic front, Weekly Jobless Claims rose to 500 000: their highest level since November 2009 and Philadelphia Fed Index unexpectedly turned negative (-7.7) for the first time since July 2009. However, July Housing Starts rose to 546k (560k expected) from 537k and July Industrial Production rose 1% against 0.5% expected (and a 0.1% decline in June). As regard to sectors, Energy stocks declined 2.5% on Crude Oil prices extending their fall and currently trading $10 lower from this month high. Banks, Health Care & Diversified Financials eased more than 1.5% on rising uncertainty about the economic recovery strength. Retail, Consumer Services & Technology stocks gained ground on M&A activity & major companies good results (Wall-Mart, Target, Home Depot, Lowes, Applied Materials, and Dell). From a technical point of view, on the S&P 500, as long as 1056 is not broken down, we favour an upmove with 1150 and then 1177 as next targets. Alternative scenario: below 1056, expect a direct drop to 1010.

- EUROPE:
European indices extended their consolidation last week with the SPMIB & the CAC declining more than 2.3%. OMX & FTSE 100 declined the less, but finally eased 1.5%. Oil & Gas was the worst performing sector (-2.5%) and Bank, Insurance and Telecommunications stocks fell more than 2%. Technology & Retail were the only sectors ending the week in the positive territory helped by gain in the US. Regarding technical, the Stoxx 600 remains bullish above 243 and is expected to rise towards 263.5 & 272.5. Alternatively, below 243, look for a direct drop to 230.

August 23rd - August 27th

Market Round up

 

Weekly chg (%)

Last

Dow Jones

-.9

10213.6

Nasdaq 100

.4

1825.8

Dax Xetra

-1.7

6005.2

Cac 40

-1.7

3536.9

Foreign Exchange

Euro/dollar : the pair should rebound on its rising trend line as the RSI is turning up. LONG above 1.2450 towards 1.3250 & 1.3510.

Dollar/yen : the pair stands within a ST bearish channel and is challenging its support as the RSI is badly directed. SHORT @ 88.8 with 83 or even 80.50 in sight.

Company preview

Cairn Energy (GBp 460.1 ; -6.71% ; CNE ; CNE.L)
On Tuesday, Cairn Energy, an oil & gas exploration and production company, is expected to publish 1H pre-tax profit of $83.1m vs a pre-tax loss of $115.6m a year ago. Last week, the Co planned to sell its 51% stake in its unit, Cairn India to Vedanta for $8.48bln. Earlier, the Co's price target was raised to 540p vs 500p at RBS Group. Technically, above 450p, the stock should resume its up trend to 500p and 525p after a ST consolidation.

L'Or (EUR 75.88 ; -2.84% ; OR ; OREP.PA)
Wednesday, L'or
will release its results. 1H net profit is expected to reach E1.37bln compared with around E1.1bln a year ago on sales of E9.6bln vs E8.8bln. Earlier, the world's largest cosmetics maker unveiled 2Q sales up over 12% to around E5bln, topping the consensus of E4.83bln. From a technical point of view, the stock price remains capped by its declining 20D MA and a key level at E74.2 should be tested in sight.

BHP Billiton (GBp 1821 ; -7.21% ; BLT ; BIL.J)
The same day, BHP Billiton, an international resources company, may announce FY pre-tax profit of nearly $20bln compared to $11.6bln last year. A week ago, S&P's placed its "A+" long-term issuer credit ratings on the Co on CreditWatch with negative implications following the proposed purchase of Potash Corp. In addition, Fitch Ratings also placed the Co's "A+" long-term IDR and senior unsecured rating on Rating Watch Negative. Graphically, the ST outlook remains bearish on the stock with a first target at 1700p, as long as the 20D&50D MAs holds on the upsides.
Crt Agricole (EUR 10.02 ; -2.43% ; ACA ; CAGR.PA)
Thursday, Credit Agricole will unveil its quarterly results. France's largest retail bank is expected to announce 2Q adjusted net profit of E484m compared to E201m a year ago. Early this month, the Co cut its shareholdings in Intesa Sanpaolo to less than 5% from around 5.5% previously. Furthermore, the Co's price target was raised to E11 from E9 at Societe Generale. Technically, the stock is now testing a major support at E10. We are cautious now and expect a ST consolidation before any decisive moves.

Ahold (EUR 9.787 ; -2.18% ; AH ; AH.AS)
On the same day, Ahold could deliver 2Q net income of E207m compared with E195m a year earlier on sales of E7bln vs E6.4bln. Earlier, the Co was upgraded to "buy" from "neutral" at BofA-ML. From a technical view, the stock is under pressure below its falling 20D & 50D MAs. The share price is more likely to test its MT level at E9.50, if breakout, it should open the way to E8.8 as a MT target.

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


Corporate Calendar August 23rd - August 27th

Date

Market

Company

Event

Monday, August 23rd

 

UK

Amlin Plc

1st-Half results

 

UK

Petrofac Ltd

1st-Half results

Tuesday, August 24th

 

UK

WPP Group

1st-Half results

 

UK

Cairn Energy

1st-Half results

 

UK

Antofagasta

1st-Half results

 

SZ

Lindt & Spruengli

1st-Half results

 

US

Big Lots

2nd-Quarter results

 

US

Medtronic

1st-Quarter results

Wednesday, August 25th

 

FR

L'Or

1st-Half results

 

UK

Aggreko Plc

1st-Half results

 

UK

Tullow Oil

1st-Half results

 

UK

BHP Billiton

annual results

 

NE

Heineken

1st-Half results

 

US

JDS Uniphase

4th-Quarter results

Thursday, August 26th

 

 

FR

Bureau Veritas

1st-Half results

 

FR

Accor

1st-Half results

 

FR

Crt Agricole

2nd-Quarter results

 

FR

Lagard

1st-Half results

 

UK

Diageo

annual results

 

NE

Ahold

2nd-Quarter results

 Friday, August 27th

 

FR

Essilor

1st-Half results

 

IT

Intesa Sanpaolo

1st-Half results

 

IT

Banco Popolare

1st-Half results

 

UK

Aegis

1st-Half results

 

SP

Iberia

1st-Half results

 

US

Tiffany & Co

2nd-Quarter results


Economic Calendar (CET) August 23rd - August 27th

Date

Market

Economic data

Period

Expected

Last

Monday, August 23rd

 

GE

Import Prices (MoM)

JUL

NA

0.9%

16:00:00

EC

Euro-Zone: Consumer Confidence

JUL

-13.3

-14

Tuesday, August 24th

16:00:00

US

Existing Home Sales (Mln)

JUL

4.65

5.37

Wednesday, August 25th

10:00:00

GE

IFO - Business Climate

AUG

105.5

106.2

10:00:00

GE

IFO - Expectations

AUG

104.2

105.5

14:30:00

US

Durable Goods Orders

JUL

3.3%

-1.2%

14:30:00

US

Durable Goods Ex Transportation

JUL

0.5%

-0.9%

16:00:00

US

New Home Sales (Thsd)

JUL

329.94

330

16:30:00

US

Crude Oil Inventories (WoW chg)

W33

NA

-81

Thursday, August 26th

10:00:00

EC

Euro-zone: M3 (3 mth ave.)

JUL

0.2%

0%

14:30:00

US

Initial Jobless Claims (Thsd)

W33

487

500

Friday, August 27th

 

GE

Retail Sales (MoM)

JUL

NA

-0.3%

10:30:00

UK

GDP (QoQ)

2Q

1.1%

1.1%

14:30:00

US

GDP (QoQ)

2Q

1.4%

2.4%

14:30:00

US

GDP Price (QoQ)

2Q

1.7%

1.8%

14:30:00

US

Personal Consumption

2Q

NA

1.6%

15:55:00

US

U. of Michigan Confidence

AUG

69.7

69.6


 


This document does not constitute financial advice. If you require such advice, you should seek appropriate professional advice.

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