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Market Outlook 15th-19th August PDF Print E-mail

Market Outlook

- WALL STREET:
US indices extended their losses last week. On the economic data front, advance retail sales rose 0.5% in July while US trade deficit widened 4.4% to $53.1 billion in June. The Federal Reserve also decided last week to keep interest rates "exceptionally low" until the mid-2013 as "downside risks to the economic outlook have increased". Looking at corporate earnings, Berkshire Hathaway posted 2Q net income up 74% YoY to $3.42B. Most sectors ended in negative territory, with banks (-7.61%) and diversified financials (-6.99%) posting the weakest performance, while insurance, media, software, telecom, energy and retail food fell by more than 2%. Materials and consumer services both gained 0.23%. From a technical view, the S&P500 index reached its key support at 1100 after successive decline, and should post a technical rebound to 1220 before any further downsides.

- EUROPE:
In the UK, the FTSE 100 index has rebounded on the 4800 support and gained 1.39% last week, but is still under pressure. Even though the continuation of the technical rebound cannot be ruled out, the upside potential should be limited below 5434. Looking at economic data, UK June industrial production fell 0.3% YoY vs -0.9% in May. Bank of England also said "the weakness in underlying activity is likely to be somewhat more persistent than (it) previously expected". In other news, Moody's, S&P, Fitch confirmed France AAA rating with a stable outlook after possible downgrade speculations. In the rest of Europe, the SMI gained most (+1.56%) among all European indices, followed by the OMX (+1.03%). The DAX index recorded the weakest performance (-3.82%) while the CAC 40 almost lost nearly 2%. Retail, technology and financial services gained most whereas utilities, automobiles and parts, banks declined over 2%. From a chartist view, the Stoxx 600 index remains on the downside after the breakout of the threshold at 262. Further decline is more likely to 215 and 195 after a limited rebound.

  August 15th - August 19th

border=0 Market Round up

 

Weekly chg (%)

Last

Dow Jones

-1.5

11269

Nasdaq 100

-.6

2182.1

Dax Xetra

-3.8

5997.7

Cac 40

-2

3213.9

border=0 Foreign Exchange

Euro/dollar : the pair has rebounded on its support and is challenging its declining 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 79.5 with 75.3 or even 73.75 in sight.

Company preview

border=0 Dell (USD 14.87 ; -1.26% ; DELL ; DELL.O)
On Tuesday, Dell is expected to post 2Q EPS of around $0.49 compared to $0.30 a year earlier on sales of $15.8B vs $15.5B. Recently, the Co planned to establish a global solution center in Chengdu, the central city of Western China. Earlier, Dell signed a definitive agreement to acquire Force10 Networks, Inc., a leader in high-performance data center networking. Technically, the stock has rebounded on the support around $13.30, but is approaching its resistance zone around $15-$15.50, which should limit the upside room and call for a new pullback.

border=0 Wal-Mart (USD 49.75 ; -2.16% ; WMT ; WMT.N)
The same day in the US, Wal-Mart Stores may announce 2Q EPS of nearly $1.1 compared with $0.97 a year ago on sales of $108.2B vs $103.7B. Early this month, the global retailing giant was said to be seeking again to acquire Carrefour's Brazilian unit, according to WSJ's report. Recently, the Co's price target was cut to $66 from $70 at Citigroup (the "buy" rating unchanged). From a technical view, the stock has broken below the key support threshold at $51.50, and should face new weaknesses towards $48.

border=0 Eurasian Natural Resources (GBp 625 ; -1.26% ; ENRC ; ENRC.L)
On Wednesday, in the UK, Eurasian Natural Resources Corp, a diversified international miner, is expected to release 1H pre-tax profit of appx. $1.7B vs $1.2B a year earlier. Recently, the Co delivered its 2Q11 production report: Volumes grew 0.8% YoY for total saleable ferroalloys and increased 3.2% for saleable ferrochrome. Volumes decreased by 4.8% YoY in iron ore extraction, and fell by 2.2% in primary concentrate production. Graphically, the stock price remains under pressure below its declining 20D MA. As long as 700p is resistance, look for a new pullback to 500p.

border=0 Holcim (CHF 48 ; -0.31% ; HOLN ; HOLN.VX)
Thursday, Holcim, a building materials provider, could report 2Q net income of E353M compared with around E400M a year ago on revenues of E5.5B vs E6.2B. Recently, the Co planned to sell as much as 7 billion pesos of debt in Mexico. The Co's price target was cut to SF57.7 vs SF71 at Goldman Sachs (the "neutral" rating unchanged). From a chartist view, the stock remains negatively oriented, but is technically "oversold". Therefore, the share price may post a ST rebound to 52 before new weaknesses.

border=0 Gap (USD 16.49 ; -1.55% ; GPS ; GPS.N)
On the same day, The Gap, Inc, the US specialty retailer, is expected to unveil 2Q EPS of $0.33 compared with $0.36 a year ago on sales of $3.37B, almost unchanged YoY. Early this month, the Co reported net sales for the four-week period ended July 30, 2011 were $949M, in line with the same period last year. The Co's comparable sales for July 2011, which include the associated comparable online sales, were down 5% vs a 2% increase for July 2010. Technically, the stock recently broke below $17.50, which now plays as a strong resistance. Below this threshold, a further down move is favorable towards $15.

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


Corporate Calendar August 15th - August 19th

Date

Market

Company

Event

border=0 Monday, August 15th

 

GE

Hochtief

2nd-Quarter results

 

UK

Michael Page International

1st-Half results

 

US

Agilent Technologies

3rd-Quarter results

 

US

Estee Lauder

4th-Quarter results

 

US

Lowe's Cos

2nd-Quarter results

 

US

Sysco

4th-Quarter results

border=0 Tuesday, August 16th

 

UK

Resolution Plc

1st-Half results

 

US

Analog Devices

3rd-Quarter results

 

US

Dell

2nd-Quarter results

 

US

Home Depot

2nd-Quarter results

 

US

TJX Companies

2nd-Quarter results

 

US

Wal-Mart

2nd-Quarter results

border=0 Wednesday, August 17th

 

UK

Eurasian Natural Resources

1st-Half results

 

UK

Henderson Group

1st-Half results

 

UK

Talvivaara Mining Co

1st-Half results

 

US

Abercrombie & Fitch

2nd-Quarter results

 

US

Deere & Co

3rd-Quarter results

 

US

JDS Uniphase

4th-Quarter results

border=0 Thursday, August 18th

 

NE

Corio

1st-Half results

 

NE

SBM Offshore

1st-Half results

 

SZ

Holcim

2nd-Quarter results

 

US

Autodesk

2nd-Quarter results

 

US

Gap

2nd-Quarter results

 

US

Hewlett Packard

3rd-Quarter results

border=0 Friday, August 19th

 

DE

William Demant

1st-Half results

 

SW

Ratos-B

2nd-Quarter results

 

SZ

Valiant

1st-Half results

 

UK

Jupiter Fund Management

1st-Half results


Economic Calendar (CET) August 15th - August 19th

Date

Market

Economic data

Period

Expected

Last

border=0 Monday, August 15th

14:30:00

US

Empire Manufacturing

AUG

.6

-3.8

16:00:00

US

NAHB Housing Market

AUG

15

15

border=0 Tuesday, August 16th

11:00:00

EC

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

JUN

NA

36.8

11:00:00

EC

Euro-Zone: GDP (QoQ)

1Q

NA

0.8%

14:30:00

US

Housing Starts (Thsd)

JUL

611

629

14:30:00

US

Bulding Permits (Thsd)

JUL

605

617

15:15:00

US

Industrial Production (MoM)

JUL

0.49%

0.19%

15:15:00

US

Industrial Capacity Utilization

JUL

77%

76.7%

border=0 Wednesday, August 17th

10:00:00

EC

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

JUN

NA

-18.3

10:30:00

UK

Unemployment Rate (ILO)

JUN

NA

7.7%

11:00:00

EC

Euro-Zone: CPI (MoM)

JUL

NA

0%

14:30:00

US

Producer Price Index (MoM)

JUL

0%

-0.4%

14:30:00

US

PPI - Ex Food & Energy (MoM)

JUL

0.2%

0.3%

16:30:00

US

Crude Oil Inventories (WoW chg)

W32

NA

-5225

border=0 Thursday, August 18th

10:30:00

UK

Retail Sales (MoM)

JUL

NA

0.8%

14:30:00

US

Consumer Price Index (MoM)

JUL

0.2%

-0.2%

14:30:00

US

CPI - Ex Food & Energy (MoM)

JUL

0.16%

0.25%

16:00:00

US

Existing Home Sales (Mln)

JUL

4.92

4.77

16:00:00

US

Philadelphia Fed.

AUG

2.4

3.2

16:00:00

US

Leading Indicators

JUL

0.2%

0.3%

border=0 Friday, August 19th

08:00:00

GE

Producer Price Index (MoM)

2Q

NA

0.1%

10:30:00

UK

Public Sector Net Borrowing (Bln)

JUL

NA

12

10:30:00

UK

Public Finances (PSNCR) (Bln)

JUL

NA

20.969

 


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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