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Market Outlook August 8th - 12th PDF Print E-mail

Market Outlook

- WALL STREET:
US indices lost ground last week, taking part in a massive sell-off on global financial markets. On the economic front, US unemployment rate fell to 9.1% (9.2% expected) in July, while factory orders dropped 0.8% in June as expected. In other news, S&P's downgraded the US LT debt rating to "AA+" from "AAA" with a "negative" outlook. Regarding corporate releases, AIG posted a 2Q net income of $1.8B vs a net loss of $2.7B a year ago. All sectors declined, with real estate (-11.69%) and automobiles & components (-11.05%) posting the weakest performance, while energy, banks, diversified financials and materials lost over 9%. From a chartist view, the S&P500 index is accelerating on the downside after the breakout of the lower boundary of its MT range pattern. Next down targets are set at 1130 and 1100.

- EUROPE:

In the UK, the FTSE 100 index collapsed last week and also broke below its key threshold at 5400, which should open the downside way towards 5100. Looking at economic data, UK July PPI Output (non seasonally adjusted) rose 5.9% YoY (+5.8% expected) vs +5.7% in June. UK PMI was revised lower to 49.1 from an initial estimation of 51 and 51.4 in June. In the rest of Europe, all European indices declined. The DAX lost 12.89%, while the SMI and the FTSE MIB tumbled 11.91% and 13.12% respectively. Euro-zone June retail sales decreased 0.4% YoY (-1% expected) vs -2.3% in May. Eurozone June unemployment rate was unchanged at 9.9%. In addition, the European Central Bank also kept its benchmark interest rate unchanged at 1.5%, in line with the market expectation. Similarly, all sectors closed into negative territory. Automobiles and parts lost most, sinking 16.1%, followed by basic resources (-14.87%) and oil & gas (-12.53%). Technically, the Stoxx 600 is approaching its key support at 230 following successive decline. A technical rebound is therefore expected to 250 before any further downsides.

  August 8th - August 12th

border=0 Market Round up

 

Weekly chg (%)

Last

Dow Jones

-5.8

11444.6

Nasdaq 100

-7.1

2194.4

Dax Xetra

-12.9

6236.2

Cac 40

-10.7

3278.6

border=0 Foreign Exchange

Euro/dollar : the pair has struck against its declining trend line but stands above its support. 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 79.5 with 76.50 or even 75.30 in sight.

Company preview

border=0 International Power (GBp 288.5 ; -5.04% ; IPR ; IPR.L)

On Tuesday, International Power Plc, an international power generating company, is expected to release 1H pre-tax profit of £973M. Recently, the Co's price target was rated at 355p ("neutral") at Goldman Sachs. Earlier, the Co was added to UBS' "Most Preferred" utilities. From a technical point of view, the share price remains under pressure following the downside breakout of 300p last week. The stock is now expected to challenge 280p, if breakout, look for a further pullback to 260p in the coming days.

border=0 Walt Disney (USD 35.18 ; -8.91% ; DIS ; DIS.N)
The same day in the US, Walt Disney may deliver 3Q EPS of $0.72 compared to $0.67 a year earlier on sales of $10.5B vs $10B. At the end of last month, the Co offered about $22.68 (1,000 rupees) a share to buy the remaining 49.6% stake it does not already own in UTV Software Communications, an Indian media company. Technically, the shares collapsed last week, as the price broke below its former support around $37.80. The ST outlook is bearish with a first target at $33.

border=0 TUI Travel (GBp 172.4 ; -10.95% ; TT/ ; TT.L)
On Wednesday, TUI Travel, the UK-based leisure travel group, could announce a 2Q loss before interest and tax of £297M compared with an operating loss of appx.£190M a year ago. Earlier, the Co's price target was cut to 185p from 240p at Citigroup. From a chartist view, the shares remain capped by the falling 20-day moving average. The recent breakout of the support threshold at 180p should trigger a new decline towards 155p.

border=0 Cisco Systems (USD 14.94 ; -6.45% ; CSCO ; CSCO.O)
On the same day, Cisco Systems is expected to post 4Q EPS of $0.38 compared to $0.35 a year earlier on sales of around $11B vs $10.8B. Recently, the Co was upgraded to "buy" from "neutral" at Goldman Sachs. Earlier, the Co could consider cutting staff and selling assets to reduce annual expenses. From a technical view, the stock remains on the downside, capped by a MT bearish trend line. Below $16, the risk of the break down $14 remains high.

border=0 Swisscom (CHF 364.3 ; -4.01% ; SCMN ; SCMN.VX)
On Thursday, Swisscom, the Swiss telecom company, could deliver 2Q net income of SF503M compared to SF493M a year ago on sales of SF2.9B vs appx. SF3B. Earlier, the Co's stock was upgraded to "buy" from "hold" at Deutsche Bank. From a technical point of view, the stock price is still negatively oriented. The descending 50D MA maintains selling pressure and should continue to push the price lower towards SF350.

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

Date

Market

Company

Event

border=0 Monday, August 8th

 

GE

Hannover Re

2nd-Quarter results

 

NE

PostNL

1st-Half results

 

UK

Telecity Group

1st-Half results

 

UK

Vedanta Resources

1st-Quarter results

 

US

CareFusion

4th-Quarter results

 

US

Tyson Foods

3rd-Quarter results

border=0 Tuesday, August 9th

 

UK

International Power

1st-Half results

 

US

Cablevision Systems

2nd-Quarter results

 

US

International Flavors & Fragrances

2nd-Quarter results

 

US

Scripps Networks Interactive

2nd-Quarter results

 

US

Sempra Energy

2nd-Quarter results

 

US

Walt Disney

3rd-Quarter results

border=0 Wednesday, August 10th

 

GE

E.ON

2nd-Quarter results

 

GE

Henkel

2nd-Quarter results

 

UK

TUI Travel

2nd-Quarter results

 

US

Cisco Systems

4th-Quarter results

 

US

Computer Sciences

1st-Quarter results

 

US

News Corp

4th-Quarter results

border=0 Thursday, August 11th

 

GE

Lanxess

2nd-Quarter results

 

GE

RWE

2nd-Quarter results

 

GE

Salzgitter

2nd-Quarter results

 

SZ

Dufry Group

1st-Half results

 

SZ

Swisscom

2nd-Quarter results

 

UK

Aquarius Platinum

annual results

border=0 Friday, August 12th

 

NO

Schibsted

2nd-Quarter results

 

SZ

Nobel Biocare

2nd-Quarter results

 

UK

EnQuest

1st-Half results

 

UK

Svg Capital Plc

1st-Half results

 

US

Estee Lauder

4th-Quarter results

 

US

JC Penney

2nd-Quarter results


Economic Calendar (CET) August 8th - August 12th

Date

Market

Economic data

Period

Expected

Last

border=0 Monday, August 8th

   

No major economic data expected

     

border=0 Tuesday, August 9th

08:00:00

GE

Trade Balance (Bln)

JUN

NA

14.8

08:45:00

FR

Central Govt. Balance (Bln)

JUN

NA

-68.37

10:30:00

UK

Industrial Production (MoM)

JUN

NA

0.9%

10:30:00

UK

Manufacturing Production (MoM)

JUN

NA

1.8%

14:30:00

US

Unit Labor Costs

1Q

2.5%

0.7%

20:15:00

US

Fed: Rates decision

 

0.25%

0.25%

border=0 Wednesday, August 10th

08:00:00

GE

Consumer Price Index (MoM)

JUL

NA

0.4%

08:00:00

GE

CPI - EU Harmonised (MoM)

JUL

NA

0.5%

08:45:00

FR

Current Account (Mln)

JUN

NA

-5.5

16:00:00

US

Wholesale Inventories

JUN

1%

1.8%

16:30:00

US

Crude Oil Inventories (WoW chg)

W31

NA

950

20:00:00

US

Monthly Budget Satement (Bln)

JUL

NA

-43.1

border=0 Thursday, August 11th

14:30:00

US

Trade Balance (Bln)

JUN

-46.8

-50.2

border=0 Friday, August 12th

07:30:00

FR

GDP (QoQ)

2Q

NA

0.9%

11:00:00

EC

Euro-Zone: Industrial Production (MoM)

JUN

NA

0.3%

14:30:00

US

Retail Sales

JUL

0.4%

0.1%

14:30:00

US

Retail Sales less Autos

JUL

0.3%

0%

15:55:00

US

U. of Michigan Confidence

JUL

63.4

63.7

16:00:00

US

Business Inventories

JUN

0.6%

1%


 


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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