Market Preview - 1 June 2012; US non-farm payrolls eyed

Forex Overnight: USD trading firmer
The USD has risen against its major counterparts this morning after Mario Monti, the Italian Prime Minister and Mario Draghi, the President of the European Central Bank, pushed Germany to give up its opposition to direct the euro-area financial assistance for struggling banks to stabilise the region’s economies. Additionally, markets await the crucial US non-farm payrolls data due later today.

At 5 am GMT, the GBP and the EUR have declined 0.3 percent and 0.2 percent against the USD to trade at $1.5367 and $1.2343 respectively.
The JPY has declined 0.1 percent against the USD amid market speculation that Japan might intervene in the currency markets.
The AUD has declined 0.6 percent versus the USD after data indicated that the China’s official manufacturing activity expanded at a slower pace in May.

UK Stocks: Expected to open higher
The FTSE 100 is likely to open 4 points in the green.
Manufacturing Purchasing Managers’ Index (PMI) and Halifax House Prices are the key economic indicators scheduled for release today.
No major corporate releases are scheduled for today.
British American Tobacco International Finance, a subsidiary of British American Tobacco, has sold $2.0 billion of senior unsecured notes in three parts in the private placement market.
Rio Tinto has indicated that it plans to buy more supplies from Chinese companies and would spend $1.5 billion this year in the Chinese market.
Leif Johansson, the new Chairman of AstraZeneca, has stated that the company has a strong executive team and that his immediate priority is finding a permanent CEO for the company.

Asia: Trading mixed
Asian markets are trading mixed this morning.
In Japan, Hitachi Construction and Komatsu have retreated following downbeat full year guidance from their US peer, Joy Global. Export sector stocks, Sony Corporation, Advantest Corporation and Honda Motor have dropped. Aozora Bank has declined after it indicated that it would not disclose plans for repayment of public funds at its June shareholder meeting. Mazda Motor Corporation is trading lower following reports that the company intends to cut 250 sales jobs in Europe and the US. On the upside, Janome Sewing Machine Company has surged amid reports that its operating profit might more than double this fiscal year. At 5 am GMT, the Nikkei 225 index is trading 1.2 percent lower at 8,437.5.
In Hong Kong, Zijin Mining Group Company has climbed after it launched an off-market takeover offer for Australia's Norton Gold Fields. Dongfeng Motor Group Company, BOC Hong Kong Holdings and China Yurun Food Group featured amongst other gainers. In South Korea, Samsung Engineering Company and Hyundai Heavy Industries are trading under pressure. On the contrary, SK C&C has advanced after it stated that it has planned to repurchase 2.0 million shares for about KRW 180.0 billion. In China, financial sector stocks, New China Life Insurance Company and Haitong Securities have added value.

US Stocks: Futures trading weak
At 5 am GMT, S&P 500 futures are trading 6.9 points lower.
Change in Non-farm Payrolls, Unemployment Rate, Personal Income & Spending, Core Personal Consumption Expenditure, ISM Manufacturing Index, Construction Spending and Domestic Vehicle Sales are the key economic indicators scheduled for release today.
Charming Shoppes and FNB United Corporation are scheduled to announce their results today.
Sara Lee Corporation jumped 5.3 percent in after hours trading session on Thursday after its Board of Directors approved the spin-off of its international coffee and tea business and announced a special dividend of $3.0 per share. Vera Bradley soared 8.9 percent after its first quarter results exceeded market expectations. On the other hand, lower-than-expected fourth quarter profit led OmniVision Technologies to plunge 8.5 percent. ePlus retreated 3.4 percent after it stated that it will restate its consolidated financial statements for fiscal years ended 31 March 2010 and 2011, and quarterly financial statements for all four quarters of FY2010-11 and first three quarters of FY2011-12. Eagle Bulk Shipping, Complete Genomics, NovaCopper and Ubiquiti Networks featured amongst other laggards, losing 7.0 percent, 5.6 percent, 5.1 percent and 4.0 percent, respectively.
Yesterday the S&P 500 index eased 0.2 percent in the regular trading session following disappointing economic reports in the US. Kohl’s Corporation tumbled 6.2 percent after it posted a decline in its same-store sales in May. Cliffs Natural Resources and United States Steel Corporation declined 6.1 percent and 5.1 percent, respectively, tracking the movement in metal prices. Netflix plunged 5.8 percent following a downbeat broker note. Joy Global slumped 5.1 percent after it slashed its full year revenue and earnings outlook. F5 Networks edged 3.8 percent lower after Mark Anderson, the head of its worldwide sales and Executive Vice President, stepped down. On the upside, TJX Companies climbed 2.7 percent after its May same-store sales surpassed market estimates. Suntrust Banks, Bank of America and Citigroup gained 3.4 percent, 2.1 percent and 2.0 percent, respectively.

European Stocks: Likely to open mixed
The DAX is expected to open 15 points lower while the CAC is likely to open 8 points higher.
German, French, Eurozone, Italian, Greek & Spanish Manufacturing PMI, Swiss SVME-PMI & Retail Sales, Eurozone & Italian Unemployment Rate and Italian Budget Balance are the major economic indicators scheduled for release today.
No major corporate releases are scheduled for today.
Reuters has reported that Martin Winterkorn, the Chief of Volkswagen AG, intends to overhaul the management board in an attempt to become the world’s largest and most profitable auto maker by 2018.
Deutsche Bank AG has won the bid for a portfolio of loans with a face value of $911.0 million sold by Capmark Financial Group Inc.
A Brazilian court has rejected a request from prosecutors that Royal Dutch Shell Brazil and BASF SA, the Brazilian subsidiary of BASF SE, must deposit $500.0 million into a fund for workers supposedly contaminated at an agricultural chemicals plant.
In an interview to Boersen Zeitung, Hanspeter Spek, the President of Global Operations at Sanofi SA, has stated that the company is considering additional acquisitions.

Macro Update
IMF denies being in funding talks with Spain
Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), has denied reports of a bailout plan for Spain and indicated that the nation has not approached the agency for any financial support.
Chinese official manufacturing activity slows
Chinese official manufacturing PMI has dropped to a reading of 50.4 in May compared to a reading of 53.3 posted in April. Meanwhile, the HSBC manufacturing PMI has been revised downwards to a reading of 48.4 in May following a preliminary reading of 48.7 recorded earlier.
Australian manufacturing index declines
The AIG Performance of Manufacturing Index in Australia has eased to a reading of 42.4 in May compared to a reading of 43.9 recorded in the prior month.
South Korean trade surplus expands
South Korean merchandise trade surplus stood at $2.4 billion in May following a $2.2 billion surplus recorded in the previous month.
South Korea consumer price inflation stabilises
On an annual basis, consumer prices in South Korea rose 2.5 percent in May, unchanged from the increase posted in April.

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