Market Preview - 14 February 2012

Forex Overnight: USD trading firmer
The USD has strengthened against the majors, this morning, after Moody’s Investors Service (Moody’s) lowered its ratings on six European nations including Italy, Spain and Portugal, prompting investors to move towards safe haven currencies. Meanwhile, markets await the outcome of the European finance ministers meeting scheduled tomorrow, to discuss a second bailout package for Greece. At 6 am, the EUR and the GBP have declined 0.2 percent and 0.4 percent against the USD, to trade at $1.3161 and $1.5711, respectively.
The JPY is trading 0.5 percent and 0.3 percent weaker against the USD and the EUR, respectively, after the Bank of Japan (BoJ) expanded its asset purchase program by ¥10.0 trillion to about ¥65.0 trillion to boost the economy.

UK Stocks: Likely to open in the red
The FTSE 100 is expected to open 6 to 8 points in negative territory.
Consumer Price Index, CB Leading Indicator Index, DCLG House Prices and Retail Price Index are the key economic indicators scheduled for release today.
Intercontinental Hotels Group, Brammer, Hargreaves Services and Yell Group are scheduled to announce their results today.
Rio Tinto has stated that it would invest $1.4 billion in Escondida copper mine in Chile, funded through its 30.0 percent share of  Escondida's cash flows.
BHP Billiton has stated that it would resume copper mining at its Pinto Valley operation in the U.S. at the end of 2012. The company has also approved a $2.6 billion investment in Escondida copper mine in Chile.
A U.S. federal judge dismissed a large part of a lawsuit accusing BP and its top executives of allegedly misleading shareholders before and after the 2010 Gulf of Mexico oil spill about its accident response capability.

Asia: Trading mostly lower
Asian markets are trading mostly lower this morning, after Moody’s lowered its debt ratings of six European nations.
In Japan, markets have climbed, after the BoJ unexpectedly expanded its asset purchase program to boost growth. Sumitomo Rubber Industries has advanced, after beating its full year profit estimate. On the downside, Ulvac has sharply declined, after it guided to a full year loss, citing a fall in orders. Export sector stocks, Sony Corporation and Mazda Motor have lost value, after Moody’s downgraded its debt ratings on six European countries including Italy, Spain and Portugal. MS&AD Insurance has registered losses, after it forecast a net loss for the full year ending 31 March 2012. At 6 am, the Nikkei 225 index has gained 0.6 percent to trade at 9,055.5.
In South Korea, STX Offshore & Shipbuilding has advanced, after it clinched deals worth $608.0 million for six tankers and two LNG carriers from Russia and Norway. In Hong Kong, Bank of China has retreated, amid news that China’s National Social Security Fund reduced its stake in the company last week. Aluminum Corporation of China and Zijin Mining Group have recorded losses, following weaker commodity prices. In China, financial sector stocks, Shanghai Pudong Development Bank, Bank of Communications and China Vanke have declined.

US Stocks: Futures trading in negative territory
At 6 am, S&P 500 futures are trading 3.6 points in the red.
Advance Retail Sales, Import Price Index, NFIB Small Business Optimism Index and Business Inventories are the key economic indicators scheduled for release today.
Metlife, Marsh & Mclennan Companies, FMC Technologies, BorgWarner Inc. and Avon Products are scheduled to announce their results today.
In after hours trading session yesterday, Ultra Clean Holdings rallied 16.7 percent, after it posted a rise in its fourth quarter profit. Upbeat fourth quarter results led Rackspace Hosting to surge 6.9 percent. Yingli Green Energy Holding advanced 5.9 percent, after its subsidiary, Yingli Energy (China) Co. Ltd., stated that it has signed a $100.0 million agreement with DuPont for photovoltaic materials. On the contrary, a wider-than-expected fourth quarter loss dragged Masco 4.8 percent lower.
The S&P 500 index rose 0.7 percent, in the regular trading session yesterday, after Greece approved austerity plans needed to secure the international financial aid. Genworth Financial, Bank of America, JPMorgan Chase and Wells Fargo gained 3.5 percent, 2.2 percent, 1.8 percent and 1.2 percent, respectively, as risk appetite amongst investors improved. Advanced Micro Devices climbed 3.4 percent, after a broker upgraded its rating on the stock to “Out-Perform” from “Market-Perform”. R.R. Donnelley & Sons advanced 2.8 percent, after it announced that it has secured a multiyear contract to provide a range of production and related services for catalogues and direct mail for Office Depot. Chesapeake Energy added 2.4 percent, after it indicated that it expects asset sales in the range of $10.0 billion to $12.0 billion in 2012 to fully fund its capital expenditures and meet its debt reduction targets. On the other hand, Estee Lauder Companies dropped 2.5 percent, after a broker downgraded its rating on the stock to “Neutral” from “Buy”.

European Stocks: Expected to open weak
The DAX and CAC are likely to open 9 to 11 points and 2 to 4 points lower, respectively.
German ZEW Survey - Economic & Current Sentiment Indices, Eurozone Industrial Production & ZEW Survey - Economic Sentiment Index are the key economic indicators scheduled for release today.
Swedbank AB, Snam SpA, MAN SE, ThyssenKrupp AG, Actelion Limited, Aurubis AG and Storebrand ASA are scheduled to report their results later today.
Moody’s has lowered its debt ratings on Italy, Portugal, Slovakia, Slovenia and Malta by one level and cut Spain’s rating by two notches. The rating agency has also lowered its outlook on France, Austria, and the U.K. to “Negative”.
Standard & Poor’s (S&P) has cut its credit ratings on 15 Spanish banks including Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA and Bankinter SA.
Deutsche Bank AG has appointed David Bianco as its Chief U.S. equity strategist.
Deutsche Boerse AG has raised its regular dividend to €2.30 for FY2011, while adding a special dividend and setting plans to buy back shares worth up to €200.0 million in the second half of 2012.

Macro Update
Moody's downgrades six Eurozone countries
Moody’s has lowered its debt ratings on Italy, Portugal, Slovakia, Slovenia and Malta by one level and cut Spain’s rating by two notches. The rating agency has also lowered its outlook on France, Austria, and the U.K. to “Negative”.
BoJ expands asset purchases; holds interest rate
BoJ has expanded its asset purchase program by ¥10.0 trillion to about ¥65.0 trillion, while it has left its key interest rate unchanged in the range of zero to 0.1 percent. The BoJ has also stated that it will set consumer price inflation of 1.0 percent as its policy goal for the time being.
S&P lowers ratings on 15 Spanish banks
S&P has cut its credit ratings on 15 Spanish banks including Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA and Bankinter SA.
Obama proposes $3.8 trillion budget
Barack Obama, the U.S. President, has sent Congress a $3.8 trillion budget plan for fiscal year 2013 that seeks to achieve a $4.0 trillion in deficit reduction over the next decade.
UK house price balance remains unchanged
The Royal Institution of Chartered Surveyors has reported that, on a seasonally adjusted basis, house price balance in the U.K. stood at a reading of -16.0 in January, compared to a similar reading recorded in the earlier month.
Australian business confidence improves
The business confidence in Australia has climbed to an eight month high reading of 4.0 in January, compared to a reading of 3.0 recorded in December.