Market Preview - 14 June 2012; Eyes on US CPI

Forex Overnight: EUR trading firmer
The EUR is trading higher against the major currencies this morning ahead of US consumer price inflation data, which is expected to decline, raising hopes of additional easing in the US. Additionally, investors keenly eye Eurozone consumer price inflation data and the Italian bond auction later today. At 5 am GMT, the EUR has risen 0.2 percent and 0.1 percent versus the USD and the GBP to trade at $1.2583 and £0.8103, respectively.
The JPY has dropped 0.2 percent against the EUR, while it has risen 0.1 percent against the USD. Data released earlier today indicated that monthly industrial production in Japan declined in May.
The AUD has advanced 0.3 percent versus the USD.

UK Stocks: Likely to open lower
The FTSE 100 is likely to open 8 to 9 points in the red.
CB Leading Economic Index for April is the major economic indicator scheduled for release today.
Halma, Mulberry Group, WS Atkins, Carphone Warehouse Group, Premier Farnell, Consort Medical, Wincanton and Redhall Group are scheduled to report their results later today.
The Financial Times has reported that BHP Billiton has lowered its outlook for commodities prices over the next three to five years.
British Sky Broadcasting Group and BT Group have won the bid to broadcast live English Premier League soccer matches from 2013 to 2016. The former paid £2.3 billion for 116 games while the latter paid £738.0 million for 38 matches including the opening game of each season.

Asia: Trading under pressure
Asian markets are trading lower this morning following a Spanish credit rating downgrade by Moody’s. Additionally, weak US retail sales and mounting fears over the upcoming Greek elections dented market confidence.
In Japan, technology sector stocks, Toshiba Corporation and Alps Electric Company have declined. Automobile sector stocks, Honda Motor Company and Toyota Motor Corporation are trading lower. On the upside, Renesas Electronics Corporation has surged amid reports that it is in talks with banks to secure loans up to ¥50.0 billion. Ricoh Company has gained after a broker upgraded its rating on the stock to “Over-weight” from “Neutral”. At 5 am GMT, the Nikkei 225 index has declined 0.1 percent to trade at 8,578.5.
In Hong Kong, Esprit Holdings has plunged after its Chief Executive and Chairman resigned in quick succession. In South Korea, electronic sector stocks, LG Electronics and LG Display are trading under pressure. On the other hand, Daewoo Engineering & Construction has climbed after it announced that it has secured a KRW 408.2 billion river restoration project in Algeria. In China, Anhui Conch Cement has dropped after a broker downgraded its rating on the stock to “Under-Perform” from “Out-Perform”. Banking sector stocks, Industrial & Commercial Bank of China and China Construction Bank are trading lower amid waning risk appetite.

US Stocks: Futures trading firmer
At 5 am GMT, S&P 500 futures are trading 6 points stronger.
Consumer Price Index, Initial & Continuing Jobless Claims and Current Account Balance are the key economic indicators scheduled for release today.
Kroger Company, Smithfield Foods, Pier 1 Imports and Winnebago Industries are scheduled to announce their results today.
Barnes & Noble advanced 0.5 percent in the after hours trading session on Wednesday after Leonard Riggio, the Founder and Chairman of the company, settled a shareholders’ lawsuit for about $29.0 million. Finisar, Dawson Geophysical, BJ’s Restaurants and Twin Disc featured amongst the major gainers, soaring 7.4 percent, 6.8 percent, 6.6 percent and 5.7 percent, respectively. On the downside, Aegerion Pharmaceuticals slumped 6.6 percent after the company announced plans to offer an unspecified number of shares in a stock offering. Korn/Ferry International retreated 2.7 percent after it reported a decline in its fourth quarter net income and offered lower-than-expected first quarter revenue and earnings guidance. Amongst other laggards, Exelixis, China Biologic Products and ViaSat declined 5.9 percent, 3.7 percent and 3.1 percent, respectively.
On Wednesday, the S&P 500 index declined 0.7 percent in the regular trading session after data indicated that US retail sales declined for a second consecutive month in May and amid persistent concerns over the Eurozone debt crisis. Progressive Corporation slumped 4.4 percent after it reported a sharp decline in its profit for May. Urban Outfitters, Macy’s Inc and Kohls Corporation declined 4.9 percent, 4.5 percent and 2.4 percent respectively, following a decline in US retail sales for May. Energy sector stocks, Pioneer Natural Resources, Cabot Oil & Gas and Chesapeake Energy retreated 4.1 percent, 4.0 percent and 3.1 percent, respectively, tracking lower crude oil prices. On the other hand, Dell gained 2.5 percent after the company indicated that it would start paying a quarterly dividend from its fiscal third quarter. Johnson & Johnson rose 2.2 percent after it received US regulatory approval for its $19.7 billion acquisition of Synthes Inc and after a broker upgraded its rating on the stock to “Buy” from “Neutral”.

European Stocks: Expected to open in the red
The DAX is likely to open 3 points down to 1 point up while the CAC is expected to open 1 to 7 points in negative territory.
German Wholesale Price Index, Eurozone’s Consumer Price Inflation & Labour Costs, Greek Unemployment Rate and Italian General Government Debt are the key economic indicators scheduled for release today. Additionally, investors await the European Central Bank’s (ECB) monthly report for June and the Swiss National Bank’s interest rate decision later today.
Kabel Deutschland Holding AG, Gerry Weber International AG, P&I Personal & Informatik AG and ESI Group SA are scheduled to announce their results today.
Nokia Siemens Networks, a joint venture of Nokia Oyj and Siemens AG, has stated that it aims to supply around 35.0 percent of Brazil's nascent fourth-generation (4G) wireless network.
In an interview to Handelsblatt, James Dilworth, the head of Allianz Global Investors European business, an asset management unit Allianz SE, has stated that Allianz Global Investors would package all brands under its own name.
The Wall Street Journal has reported that Credit Agricole SA is planning to lower its stake or abandon its Greek Emporiki Bank unit, if Greece exits the Eurozone.
Private equity investor, Vector Capital, has stated that it has raised its offer for Technicolor SA.

Macro Update
Moody's downgrades Spain and Cyprus
Moody's Investors Service has lowered its sovereign debt ratings on Spain and Cyprus to “Baa3” from “A3” and “Ba3” from “Ba1”, respectively and placed them on review for further downgrades.
Geithner calls for more Eurozone measures
The US Treasury Secretary, Timothy Geithner, has called the Spanish banking system bailout as “a good, concrete signal” of the Eurozone’s commitment to boost financial integration, but stated that the region must undertake more measures quickly to alleviate its crisis.
Australian consumer price inflation expectation declines
The annual consumer price inflation expectation in Australia fell to 2.3 percent in June, down from an expectation of 3.1 percent in the previous month.
RBNZ holds key interest rate
The Reserve Bank of New Zealand (RBNZ) has retained its benchmark interest rate at the record low of 2.5 percent, in line with market expectations.

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