Market Preview - 12 January 2012

Forex Overnight: EUR trading firmer
The EUR is trading higher against most of the major currencies, this morning, ahead of today’s Spanish and Italian bond auctions worth €5.0 billion and €12.0 billion, respectively, and industrial production data in the Eurozone. Traders are also keeping an eye on the policy meeting of the European Central Bank (ECB), wherein the central bank is expected to maintain its key interest rate. At 6 am, the EUR has advanced 0.1 percent each against the GBP and the USD to trade at £0.8301 and $1.2718, respectively.
The JPY has slid marginally against the USD, while it has declined 0.1 percent against the EUR. Data indicated that Japan’s current account surplus declined sharply in November.
The AUD has lost 0.1 percent against the USD, while the CAD has gained 0.1 percent against the USD.

UK Stocks: Likely to open higher
The FTSE 100 is expected to open 9 to 11 points in positive territory.
The NIESR Gross Domestic Product Estimate and Industrial & Manufacturing Production are the key economic indicators scheduled for release today. Investors also await the Bank of England’s interest rate decision later today.
Sandvine Corporation is scheduled to announce its results today.
Xinhua news agency has reported that the Changbei natural gas project, jointly owned by PetroChina Company and Royal Dutch Shell in northern China, has produced a record 3.5 billion cubic metres in 2011.
Rio Tinto has announced that it has completed the acquisition of the Canadian uranium company, Hathor Exploration Ltd.
The Wall Street Journal has reported that Royal Bank of Scotland Group is set to unveil its job reduction programme today, in an attempt to trim its investment banking division and focus on retail operations.
According to Reuters, Thomas Cook Group has decided to sell its Indian unit in a move to raise money to help its troubled global operations.

Asia: Trading mostly in the red
Asian markets are trading mostly in negative territory.
In Japan, financial sector stocks, Tokai Tokyo Financial Holdings, Nomura Holdings and Okasan Securities Group have retreated. On the other hand, China-focused construction machinery sector stocks, Komatsu and Hitachi Construction Machinery have climbed, amid optimism that easing inflation in China may prompt the central bank to take action to spur growth. Sumco Corporation has advanced, after Tokyo Electron indicated that orders had doubled. At 6 am, the Nikkei 225 index is trading 0.7 percent lower at 8,385.5.
In China, Chongqing Department Store has plunged, after its full year net income trailed market expectation. Northeast Securities is trading lower, after it posted a loss for the full year. On the contrary, Changzhou Eging Photovoltaic Technology and Shanghai Chaori Solar Energy Science & Technology have advanced, after China’s National Energy Administration earlier announced plans to double solar capacity this year. In Hong Kong, Cnooc and PetroChina Company have declined, following a decline in crude oil prices yesterday. In South Korea, financial sector stocks, Shinhan Financial Group and Hana Financial Group are trading higher.

US Stocks: Futures trading in negative territory
At 6 am, S&P 500 futures are trading 1.3 points lower.
Advance Retail Sales, Initial & Continuing Jobless Claims and Business Inventories are the key economic indicators scheduled for release today. Investors also await the release of the Monthly Budget Statement for December.
Essex Property Trust, Washington Federal, Material Sciences, Emmis Communications and Peoples Educational Holdings are scheduled to announce their results today.
Chevron Corporation dropped 1.9 percent, in after hours trading session yesterday, after it stated that it expects its fourth quarter earnings to be “significantly below” its third quarter level. A lower-than-expected 2012 adjusted earnings outlook dragged PVH Corporation 4.1 percent lower. On the contrary, Grand Canyon Education surged 9.1 percent, after a broker upgraded its rating on the stock to “Buy” from “Neutral”. CA Inc jumped 6.0 percent, after Taconic Capital Advisors LP acquired a 5.1 percent stake in the company. Tractor Supply gained 4.9 percent, after it issued better-than-expected fourth quarter revenue guidance.
The S&P 500 added 0.4 points in the regular trading session yesterday. Financial sector stocks, Genworth Financial, Citigroup and Bank of America climbed 7.3 percent, 4.2 percent and 3.6 percent, respectively, as risk appetite among investors improved. First Solar surged 7.8 percent, on optimism of stronger-than-expected demand, after China earlier stated that it plans to double solar electricity generation capacity in 2012. Lennar Corporation advanced 7.2 percent, after its fourth quarter revenue surpassed market expectations. Textron jumped 5.7 percent, amid reports that it was considering a strategic review which could involve disposal of some of its assets. On the other hand, Urban Outfitters tumbled 18.6 percent, after it disclosed that its CEO, Glen T. Senk, had resigned. A downbeat full year revenue outlook led Supervalu to plunge 12.5 percent. Resources sector stocks, Cabot Oil & Gas, Southwestern Energy and Range Resources retreated 11.2 percent, 8.0 percent and 6.3 percent, respectively.

European Stocks: Expected to open in the green
The DAX and CAC are likely to open 13 to 14 points and 15 to 16 points higher, respectively.
German & French Consumer Price Index, German Wholesale Price Index, French Current Account & Central Government Balance and Eurozone Industrial Production are the key economic indicators scheduled for release today. Investors also await the interest rate decision from the ECB.
Geberit AG, Suedzucker AG, Sulzer AG, Banco Espanol de Credito SA and Stallergenes SA are scheduled to report their results later today.
GDF Suez SA has stated that it has teamed up with Vinci SA and CDC to submit their bids for four of five offshore wind-farm projects that the French government is auctioning.
The Financial Times Deutschland has reported that Deutsche Telekom AG is close to an agreement to make its fiber-optic network available to Telefonica SA’s German unit.
Chrysler Group LLC, the automaker controlled by Fiat SpA, has stated that it has boosted its North American production by 27.0 percent to almost 2 million vehicles in 2011 and plans a 20.0 percent increase for 2012.
Petroplus Holdings AG has stated that it has reached a temporary agreement with its lenders under the revolving credit facility.

Macro Update
Fed’s Beige Book more upbeat about economy
The Federal Reserve’s (Fed) Beige Book has indicated that the U.S. economic activity expanded “at a modest to moderate pace” in the latter part of 2011.
Chinese consumer and producer price inflation eases
The annual consumer price inflation in China has eased for a fifth consecutive month to 4.1 percent in December, compared to a 4.2 percent rate recorded in November. Separately, the annual producer price inflation has slowed to 1.7 percent in December, compared to a 2.7 percent rate posted in November.
Japan’s current account surplus declines sharply
Japan’s current account surplus has dropped more-than-expected to ¥138.5 billion in November, compared to a ¥562.4 billion surplus reported in October.
Japanese bank lending rises
On an annual basis, bank lending in Japan has climbed 0.5 percent to ¥395.8 trillion in December, following a 0.2 percent increase recorded in November.

Economic Calendar

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Corporate Calendar