Market Preview - 10 July 2012; EU agrees aid plan for Spain

UK Stocks: To open slightly higher
The FTSE 100 is likely to open 5 to 6 points in the green.
Industrial & Manufacturing Production, Visible & Total Trade Balance and NIESR GDP Estimate are the key economic indicators scheduled for release.
Accsys Technologies Plc is scheduled to report its results.
A coalition of environmental groups have indicated their plans to file a federal lawsuit seeking to overturn federal approvals for Royal Dutch Shell’s planned exploration drilling in Arctic waters off Alaska.
A US Senate panel investigating possible involvement of HSBC Holdings in illicit money laundering activities will detail the findings of its inquiry at a hearing on 17 July 2012.
BP has suspended a $1.5 billion offshore oil project in Alaska for an indefinite period following cost overruns and technical setbacks.
International Airlines Group SA has stated that it would issue its first secured bond, backed by its take-off and landing slots at Heathrow airport, as well as British Airways’ routes between London City Airport and JFK in New York.

Asia: Trading in the red
Asian markets are trading under pressure this morning tracking overnight losses on Wall Street and after data indicated that Chinese imports trailed market consensus while exports growth slowed.
In Japan, Nikon Corporation has tumbled after Intel Corporation stated that it will invest in ASML Holdings, a competitor of the Japanese chip-equipment maker. Mitsubishi UFJ Financial Group has edged lower amid news that company’s core banking unit had suspended two traders suspected of prior involvement in the manipulation of the LIBOR. On the contrary, Furukawa-Sky Aluminum has advanced following better-than-expected second quarter results from its US peer, Alcoa. At 5 am GMT, the Nikkei 225 index has declined 0.2 percent to trade at 8,877.5.
In Hong Kong, Li Ning has declined after the company announced that its licensee, LN Plus Iberoamerica, has filed for bankruptcy due to deteriorating market conditions in Spain. In China, Poly Real Estate Group has lost value after it indicated that it expects its first half year profit to decline. In South Korea, OCI Company has plunged after a broker lowered its target price on the stock. Hyundai Motor has edged lower after a consumer watchdog in the US sued the company for allegedly misleading consumers.

US Stocks: Futures trading lower
At 5 am GMT, S&P 500 futures are trading 5.4 points in the red.
NFIB Small Business Optimism Index and IBD/TIPP Economic Optimism Index are the key economic indicators scheduled for release.
Shaw Group, Wolverine World Wide, Destination Maternity Corporation, VOXX International and Tuesday Morning Corporation are scheduled to announce their results.
Alcoa ended flat in after hours trading session yesterday despite posting better-than-expected second quarter results. ASML Holding NV surged 7.2 percent after Intel Corporation announced that it would acquire an ownership stake in the company and entered into various agreements over development of wafer technology and lithography. Coldwater Creek soared 5.8 percent after it closed a five-year, $65.0 million loan provided by Golden Gate Capital, a private-equity firm. On the other hand, Advanced Micro Devices slumped 10.7 percent after it lowered its revenue expectations for the second quarter. PriceSmart plunged 6.4 percent following dismal third quarter results. Patriot Coal Corporation plummeted 42.7 percent after it filed for Chapter 11 bankruptcy protection.
The S&P 500 index dropped 0.2 percent in the regular trading session yesterday as rising Italian and Spanish bond yields fuelled concerns about the European debt crisis. Resource sector stocks, Alpha Natural Resources, Peabody Energy Corporation and WPX Energy retreated 7.5 percent, 6.2 percent and 4.0 percent, respectively. Technology sector stocks, Akamai Technologies dropped 4.1 percent, while JDS Uniphase Corporation and Red Hat lost 3.4 percent each. MasterCard and Visa fell 2.4 percent and 1.3 percent, respectively, after a broker downgraded its rating on both the stocks to “Sell” from “Neutral”. On the upside, Wellpoint climbed 3.4 percent after it agreed to acquire Amerigroup Corporation for $4.9 billion. Coventry Health Care and Cardinal Health advanced 2.1 percent and 1.9 percent, respectively. Apple climbed 1.3 percent following upbeat broker comments. Boeing Company added 0.5 percent after it stated that it has secured an order worth $7.2 billion from Air Lease Corporation for 75 aircrafts.

European Stocks: Likely to open mixed
The DAX is expected to open 2 to 6 points lower while the CAC is expected to open 2 to 7 points higher.
French Industrial & Manufacturing Production, Italian & Greek Industrial Production and Portuguese Trade Balance are the key economic indicators scheduled for release. Additionally, investors are keeping a close eye on the second day of the Eurogroup finance ministers meeting in Brussels.
Sodexo SA, Axis AB, Klovern AB, Atrium Ljungberg AB and Xano Industri AB are scheduled to announce their results.
Automotive News China has reported that Volkswagen AG intends to build an assembly factory in the central Chinese city of Wuhan with its local joint venture partner, China FAW Group Corporation.
Statoil ASA has indicated that it plans to immediately resume production on the Norwegian continental shelf, including output at its Oseberg field, after the government stopped offshore workers’ strike.
A union official stated that around 1,200 workers at Niger's Akouta uranium mine owned by COMINAK, a subsidiary of Areva SA, have commenced a 72 hour strike.

Forex Overnight: EUR trading lower
The EUR is trading weak against the majors early Tuesday ahead of the release of French and Italian industrial production data slated later today which is expected to show a decline for May. Additionally, the currency came under pressure after the European Central Bank President, Mario Draghi signaled that the central bank might consider another interest rate cut if the economic outlook warrants. At 5 am GMT, the EUR is trading 0.3 percent and 0.1 percent lower against the USD and the GBP at $1.2285 and £0.7925, respectively.
The AUD has dropped 0.4 percent against the USD after data indicated a slower pace of growth in Chinese exports and imports in June.

Macro Update
EU agrees on Spain bailout, says Juncker
Jean-Claude Juncker, the President of the Eurogroup, has stated that the Eurozone finance ministers have agreed to grant a bailout package to Spain and is likely to disburse its first installment of €30.0 billion by the end of July.
UK house price balance deteriorates
The Royal Institute of Chartered Surveyors has indicated that the house price balance in the UK has declined to a reading of -22.0 in June following a downwardly revised reading of -17.0 posted in May.
UK same-store retail sales increase
The British Retail Consortium has stated that like-for-like retail sales in the UK have climbed 1.4 percent Y-o-Y in June following a 1.3 percent rise posted in May.
China’s trade surplus widens more-than-forecast
The Chinese trade surplus has widened more-than-expected to $31.73 billion in June following a $18.70 billion surplus recorded in the previous month.
Lacker sees ‘tepid’ US growth, not recession risk
Jeffrey Lacker, the President of the Federal Reserve Bank of Richmond, has indicated that the second quarter economic data was “pretty tepid”. He further indicated that the risk of the nation sliding into a recession is low even though the economy is experiencing a slowdown.
US consumer credit rises more-than-expected
The consumer credit in the US has increased more-than-anticipated by $17.12 billion in May compared to a revised increase of $9.95 billion recorded in April.
Japan’s M2 money supply climbs
The M2 money stock in Japan has risen 2.2 percent Y-o-Y in June compared to a similar rate recorded in the earlier month.
Australian business confidence weakens
The National Australia Bank’s business sentiment index has declined to a reading of -3.0 in June compared to a reading of -2.0 recorded in May.

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