22 February 2012 at 8:47 GMT
The US just barely managed to hang on to gains in equities yesterday as sentiment weighed on risk appetite. To apply an oft-used cliché: buy the rumour, sell the fact.
Today we turn our attention to the Eurozone Purchasing Managers' Index (PMI), which is expected to rise a bit again in February. Earlier today both France and China posted better-than-expected Manufacturing PMI while Germany missed expectations, while still showing expansion. Later on we turn to the US and sales of existing home and then earnings from Hewlett-Packard after market.
- Feb. EZ Manufacturing PMI (09:00 GMT) to rise? France and Germany kicked off the day with mixed PMIs from their respective manufacturing sectors. These two economies account for more than 50 percent of overall Eurozone GDP, so we look set for an overall increase in Eurozone Manufacturing PMI. Consensus looks for 49.4, up from 48.8, although a simple regression using German and French data points to a bit better number of 49.7. That said, this may not properly account for the weakness in peripheral Euro countries. The Eurozone Services PMI, meanwhile, is expected to show expansion yet again at 50.6 from 50.4, according to analysts' forecasts.
- Jan. US Existing Home Sales (15:00) - housing recovery: Last week's surprisingly good NAHB Housing Market Index, which rose to 29, is the highest reading since May 2007 (at 30). just yesterday Home Depot caught the market by surprise as well, announcing earnings and sales growth of 39% and 5.9% y/y, respectively. We continue to expect a drawn-out US recovery, but a recovery nonetheless. Consensus looks for an increase of 1.1% m/m in January sales of existing homes.
- Hewlett-Packard 1Q'12 earnings to disappoint? The 58 billion dollar IT mammoth is scheduled to announce earnings today after market closing, with analysts projecting a decline in (adj. diluted) EPS to 0.868 from 1.14 a quarter ago and 1.287 a year ago. Despite the weakness in earnings seen during the last year or so, HP has nevertheless managed to surprise to the upside in each of the last 8 quarters, lastly in 4Q 2011 by 2.6%. Sales are expected to decline to 30.8 billion from 32.1bln.
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