Market Preview - 10 August 2012; French industrial output on tap

Forex Overnight: EUR trading lower
The EUR has continued to weaken against the majors this morning after the European Central Bank (ECB), in its monthly bulletin yesterday, projected further economic contraction in the Eurozone this year. Meanwhile, investors await the release of the French industrial production data slated later in the day, which is expected to show a monthly rebound in June. At 5 am GMT, the EUR is trading 0.1 percent lower against the USD at $1.2292 while it is trading marginally weaker against the GBP at £0.7868.

The AUD has declined 0.5 percent against the USD after data indicated an unexpected contraction in Chinese trade surplus in July.

The JPY is trading 0.1 percent higher against the EUR while it is trading marginally lower against the USD.

UK Stocks: Expected to open in negative territory
The FTSE 100 is likely to open 17 to 20 points in the red.

Producer Price Index – Input & Output are the key economic indicators scheduled for release today.

Prudential, UK Coal and Stanley Gibbons Group are scheduled to report their results today.

Barclays has announced that David Walker will join as a Non-Executive Director with effect from 1 September 2012 and will succeed Marcus Agius as the Chairman with effect from 1 November 2012.

GKN has stated that it would invest over £12.0 million to boost capacity at its Birmingham and Telford facilities in central England.

Asia: Trading weaker
Asian markets are trading in negative territory this morning after data indicated that Chinese trade surplus unexpectedly shrunk in July.

In Japan, Trend Micro has slumped after it reported a decline in its second quarter earnings. A wider first quarter net loss led Olympus Corporation to edge lower. Mitsubishi UFJ Financial Group has registered losses amid reports that one of its employees is under suspicion for manipulating the Yen-quoted LIBOR. On the upside, DeNA Company has rallied after its first quarter operating profit surpassed market consensus. JX Holdings has advanced after a broker upgraded its rating on the stock to “Out-Perform” from “Neutral”. At 5 am GMT, the Nikkei 225 index has retreated 1.1 percent to trade at 8,882.5.

In Hong Kong, Li & Fung has tumbled after the company reported a significant decline in its first half year core operating profit. In China, a sharp drop in its first half year net income led TCL Corporation to edge lower. Kweichow Moutai has slumped after it reported a slowdown in its first half year profit growth. In South Korea, LG Display has risen following positive broker comments.

US Stocks: Futures trading in the red
At 5 am GMT, S&P 500 futures are trading 5.6 points weaker.

Import Price Index is the key economic indicator scheduled for release today. Investors also await the monthly Budget Statement for July later today.

J.C. Penney Company, Harman International Industries, Rentech Inc., Horizon Pharma and Heska Corporation are scheduled to announce their results today.

NVIDIA climbed 4.4 percent in the after hours trading session yesterday on the back of better-than-expected second quarter results and upbeat third quarter revenue guidance. CareFusion Corporation jumped 3.8 percent following robust fourth quarter results. Fusion-io surged 26.1 percent after its fourth quarter earnings excluding one-time items surpassed market expectations. On the downside, Yahoo! Inc. dropped 3.4 percent after the company disclosed in a regulatory filing that Marissa Mayer, its new CEO, is reviewing the company’s business strategy and the recent restructuring plan. Weaker-than-expected first quarter results forecast led Ubiquiti Networks to plummet 33.2 percent. Pegasystems plunged 9.3 percent after it swung to a loss in the second quarter.

The S&P 500 index added 0.6 points in the regular trading session yesterday. Data indicating an unexpected decline in the weekly US initial jobless claims and a narrower trade deficit in June boosted investor confidence. E*TRADE Financial Corporation rallied 6.9 percent after it announced the exit of its CEO, Steven Freiberg. Cisco Systems rose 3.2 percent after a broker added the stock to its “Conviction Buy” list.  Resource sector stocks, Alpha Natural Resources, CONSOL Energy and Peabody Energy Corporation soared 15.1 percent, 6.4 percent and 6.3 percent, respectively. PulteGroup jumped 4.8 percent after a broker upgraded its rating on the stock to “Over-weight” and raised its price target on the stock. On the downside, Monster Beverage Corporation slumped 9.7 percent after its second quarter results came in below market expectations. Windstream Corporation plunged 7.5 percent after it posted a decline in its second quarter earnings.

European Stocks: Expected to open weak
The DAX and the CAC are likely to open 41 to 44 points and 13 to 15 points in negative territory, respectively.

German & Italian Consumer Price Index and French Manufacturing Production, Budget Balance & Industrial Output are the key economic indicators scheduled for release today.

ThyssenKrupp AG, Hannover Rueckversicherung AG, Rheinmetall AG, Saras SpA, Finnair Oyj and Hkscan Oyj are scheduled to announce their results today.

According to Reuters, RWE AG has presented plans for further job cuts of up to 2,400 positions amid Germany's decision to shut down all nuclear power plants by 2022.

The Financial Times has reported that plans have been made to form a consortium to acquire a 66.0 percent stake in the nuclear group, Urenco, for about €7.0 billion in which RWE AG and E.ON AG jointly hold about 33.0 percent stake.

Societe General SA has agreed to sell its stake in TCW Group Inc. to private equity firm, Carlyle Group LP and the management and employees of TCW Group.

Renault Samsung Motors, the South Korean unit of Renault SA, has stated that it would offer voluntary retirement to few employees following a slump in sales since last year.

The UK National Institute for Health and Clinical Excellence has asked Roche Holding AG to provide further information about the expense of its Zelboraf skin cancer treatment before the agency recommends its use in the National Health Service program.

Macro Update
Chinese trade surplus unexpectedly narrows
The trade surplus in China has surprisingly narrowed to $25.2 billion in July compared to a $31.7 billion surplus posted in June. Meanwhile, exports have grown 1.0 percent Y-o-Y in July, worse than market consensus and compared to an 11.3 percent growth reported in the previous month.

RBA hikes its 2012 economic growth outlook
The Reserve Bank of Australia (RBA) has raised its 2012 domestic Gross Domestic Product growth forecast to 3.5 percent from an earlier forecast of a 3.0 percent rise, citing better-than-expected economic performance in the first half year.

Japan’s domestic CGPI unexpectedly drops
On a monthly basis, the domestic Corporate Goods Price Index (CGPI) in Japan has unexpectedly declined 0.4 percent in July compared to a 0.7 percent fall reported in the earlier month.

New Zealand’s debit & credit card spending declines
Credit and debit card spending in New Zealand has dropped 0.8 percent M-o-M in July following a revised 0.1 percent rise reported in June.

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