Market Preview - 10 November 2011

Forex Overnight: EUR trading flat
The EUR is trading flat against the USD and the GBP, this morning, as investors remain cautious, ahead of Italy’s one-year bill auction worth €5.0 billion scheduled later today. Yesterday, the Euro declined sharply against the major currencies, after Italy’s bond yield climbed above 7.0 percent, the level at which Greece, Ireland and Portugal sought international bailouts. At 6 am, the EUR has advanced marginally against the USD, to trade at $1.3547, while it has lost marginally against the GBP, to trade at £0.8506.
The JPY has strengthened 0.2 percent against the USD, while it has climbed 0.1 percent against the EUR.
The AUD is trading marginally lower against the USD, despite data indicating that Australian jobless rate declined in October.

UK Stocks: Expected to open in negative territory
The FTSE 100 is likely to open 81 points lower.
Investors await Bank of England’s asset purchase and interest rate decision.
Experian, Vedanta Resources, 3i Group and Euromoney Institutional Investor are scheduled to announce their results today.
BHP Billiton has stated that it has finalised an agreement with the Western Australia state government to increase the royalty rate paid to the state for its iron ore fines product from 5.625 percent to 6.5 percent of sales revenue from July 2012, and to 7.5 percent from July 2013.
Anglo American has announced that it has sold a 24.5 percent stake in its Sur copper mining complex in Chile for about $5.39 billion to Japan’s Mitsubishi Corporation.
The National Institute for Health and Clinical Excellence, in its final appraisal, has rejected the use of AstraZeneca's breast cancer drug, Faslodex, in the U.K.’s health service programme, as it was not found to be significantly better than the existing treatments.
The Financial Times has reported that Nathaniel Rothschild, the co-Chairman of Bumi Plc, has criticised the management and corporate governance at its Indonesian affiliate, PT Bumi Resources.

Asia: Trading in the red
Asian markets are trading sharply lower this morning, taking cues from overnight losses on Wall Street.
In Japan, Daiwa Securities Group has declined, after Moody’s Investors Service downgraded its credit rating on the company by one notch to “Baa3”, with a negative outlook. Nomura Holdings has lost value, after Moody’s Investors Service put the company’s credit rating under review for a likely downgrade. Hitachi Construction, Komatsu Limited and Fanuc Corporation have slumped, following more-than-expected decline in Japanese machinery orders in September. At 6 am, the Nikkei 225 index has lost 2.7 percent to trade at 8,519.5.
In Hong Kong, HSBC Holdings has tumbled, after it reported a significant decline in its third quarter profit. Industrial & Commercial Bank of China has slumped, after Goldman Sachs sold shares worth $1.1 billion in the Chinese bank. In South Korea, LG Display has declined, amid reports that the company plans to halve its LCD investment to around KRW 2.0 trillion in 2012. In China, Anhui Conch Cement has retreated, after data indicated sluggish Chinese export growth in October.

US Stocks: Futures trading in the green
At 6 am, S&P 500 futures are trading 2.9 points higher.
Key economic indicators scheduled for release today include Initial & Continuing Jobless Claims, Trade Balance and Import Price Index. Investors also await the release of the Budget Statement for October.
Walt Disney, Kohl’s Corporation, Nordstrom, Nvidia Corporation and Flowers Foods are scheduled to announce their results today.
Cisco Systems rose 2.6 percent in after hours trading session on Wednesday, after it reported better-than-expected first quarter adjusted earnings. ChinaCast Education and C&J Energy Services rallied 21.1 percent and 7.4 percent, respectively, after they reported robust third quarter profit. Lower-than-anticipated fourth quarter revenue led Green Mountain Coffee Roasters to plummet 34.2 percent. Delta Petroleum tumbled 62.0 percent, after it reported a third quarter loss and stated that it may seek Chapter 11 Bankruptcy, if it is not able to consummate a transaction that addresses its liquidity issues.
In the regular trading session yesterday, the S&P 500 index slumped 3.7 percent, amid mounting concerns over the financial condition in Italy, following a surge in the country’s bond yields. Banking sector stocks, Morgan Stanley, Goldman Sachs Group and Citigroup plummeted 9.1 percent, 8.3 percent and 8.2 percent, respectively, after LCH Clearnet SA increased the charge it levies on clients for trading Italian government bonds and index-linked securities. Adobe Systems tumbled 7.7 percent, after it stated that it plans to lay off 750 employees, mainly in North America and Europe, as part of a restructuring plan. Moreover, the company cut its fourth quarter GAAP earnings per share guidance. The top laggard on the S&P 500 index, Computer Sciences plunged 15.4 percent, after it swung to a second quarter loss, and lowered its full year earnings outlook. Dean Foods dropped 7.1 percent, after it swung to a third quarter loss and warned of an unfavourable volume and pricing environment in the fourth quarter. Lower-than-expected third quarter earnings led Macy’s Incorporation to decline 5.3 percent.

European Stocks: Likely to open weaker
The DAX and CAC are expected to open 96 points and 52 points in the red, respectively.
German & French Consumer Price Index, German Wholesale Price Index and French Industrial & Manufacturing Production are the key economic indicators scheduled for release today. Investors also await the release of the European Central Bank’s report for November.
Siemens AG, EDF SA, Deutsche Telekom AG, Repsol YPF SA, EADS NV, RWE AG and Credit Agricole SA are scheduled to report their results later today.
John Bannerman, the President and CEO of Total USA, the U.S. division of Total SA, has stated that Total is seeking to increase its presence in the U.S. shale basins, by making new joint ventures, or by becoming an operator.
According to Bloomberg, a U.S. Court of appeals in San Francisco has refused to review a ruling that Daimler AG must face claims that its Argentine Mercedes-Benz unit collaborated with state security forces to kill and torture workers during the so called Dirty War that started in 1976.
Manisha Girotra, the Managing Director and Chairperson of Indian operations at UBS AG has resigned, and Aashish Kamat has been appointed as the new CEO with immediate effect.
According to Bloomberg, UBS AG, Citigroup Inc. and Natixis SA are planning to launch a $750.0 million joint offering of commercial mortgages in December.

Macro Update
Euro not in crisis, crisis is over debt, says Juncker
The head of the Euro Group of finance ministers, Jean-Claude Juncker, has stated that there was no crisis of the Euro as a currency, but rather that there is a crisis over public debt in some Eurozone countries.
France denies discussing idea of a smaller Eurozone
According to Reuters, quoting anonymous senior EU officials, France and Germany have, over the past few months, explored a radical restructuring of the European Union, that could involve the setting up of a more integrated and potentially smaller eurozone. However, a French Finance Ministry spokesman has denied that the two countries have ever discussed reducing the size of Eurozone.
Chinese trade surplus expands
Chinese trade surplus widened less-than-expected to $17.03 billion in October, compared to a $14.51 billion surplus recorded in the previous month.
Japan’s core machinery orders plunge
On a seasonally adjusted monthly basis, core machinery orders in Japan dropped 8.2 percent in September, compared to an 11.0 percent increase reported in August.
Australian unemployment rate drops
The jobless rate in Australia declined to 5.2 percent in October, compared to an upwardly revised 5.3 percent level in September.

Economic Calendar

Note: PPPHigh           PPMedium           PLow


Corporate Calendar