Market Preview - 16 January 2012

Forex Overnight: EUR trading under pressure
The EUR is trading weaker against the majors this morning amid uncertainty ahead of the €8.7 billion French bills auction s later today. Moreover, Standard & Poors’ (S&P) credit ratings downgrade of nine Eurozone nations including France, on Friday, has continued to weigh on investor sentiment. At 6 am, the EUR has declined 0.3 percent against the USD to trade at $1.2636, while it has dropped 0.2 percent against the GBP to trade at £0.8259.
The JPY has strengthened 0.2 percent against the USD. Data indicated that Japanese consumer confidence rebounded in December.
The AUD is trading 0.5 percent lower against the USD, amid market expectations that data scheduled for release tomorrow may indicate a slower pace of economic growth in China for the fourth quarter.

UK Stocks: Expected to open lower
The FTSE 100 is likely to open 22 to 25 points in the red.
No major economic and corporate releases are scheduled for today.
According to the Sunday Times, BP is mulling offering financial aid to support the struggling oil refiner, Petroplus Holdings AG.
The Financial Times has reported that a group of dealmakers at Royal Bank of Scotland are considering a management buyout as the bank plans to sell or shut down its advisory business.
In an interview to the Sunday Times, Philip Clarke, the CEO of Tesco, has reportedly stated that the company will spend as much as £400.0 million to renovate its U.K. stores and hire more staff in 2012.
The Sunday Times has reported that Cairn Energy is in talks with Rockhopper Exploration over the latter’s $2.0 billion oil project in Falkland Islands.

Asia: Trading in the red
Asian markets are trading in negative territory, this morning, after S&P downgraded its long-term credit rating on France and eight other Eurozone countries on Friday.
In Japan, exporters to Europe, Canon, Sony and Nippon Sheet Glass have lost value, as the Yen strengthened against the Euro. Olympus Corporation has declined, amid reports that Toshiba was set to propose an equity tie-up with the company. Receding risk appetite amongst investors has weighed on financial sector stocks, with Nomura Holdings, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group trading in the red. Energy sector stocks, Inpex Corporation and Japan Drilling have also edged lower. At 6 am, the Nikkei 225 index has dropped  1.5 percent to trade at 8,371.0.
In South Korea, Samsung Electronics and LG Electronics are trading in negative territory. On the other hand, Hyundai Merchant Marine has climbed, amid speculation of a possible takeover bid by KCC Corporation. In China, lower base metal prices have led Jiangxi Copper to trade in the red. Wuliangye Yibin has slipped, amid news that some its products failed tests conducted by the Guangdong Province Administration for Industry & Commerce. In Hong Kong, Citic Securities is trading lower, despite reporting a rise in its full year net profit.

US Stocks: Futures trading weak
At 6 am, S&P 500 futures are trading 6.3 points in the red.
No major economic and corporate releases are scheduled for today.
In after hours trading session on Friday, CVR Energy climbed 3.0 percent, after it earlier announced that entities associated with billionaire, Carl Icahn, have invested in the company. Eastman Kodak Company edged 2.1 percent higher, after it unveiled another digital imaging patent lawsuit against Fujifilm Holdings Corporation. Among other stocks, AOL, Spectrum Pharmaceuticals and Office Depot have advanced 5.0 percent, 2.8 percent and 2.6 percent, respectively. On the other hand, Kemet lost 4.6 percent, after it lowered its third quarter revenue guidance. Wabash National, Rovi and EnerNOC, featured among other losers, declining 8.0 percent, 6.1 percent and 5.5 percent, respectively.
The S&P 500 index slid 0.5 percent in the regular trading session on Friday, amid reports that S&P would downgrade its credit ratings on several Eurozone countries, and following downbeat quarterly results from JPMorgan Chase. Lower-than-expected fourth quarter revenue and a sharp drop in earnings dragged JPMorgan Chase 2.5 percent lower. Financial sector stocks, Morgan Stanley, Citigroup and Bank of America dropped 3.2 percent, 2.7 percent and 2.7 percent, respectively, as risk appetite amongst investors waned. Resources sector stocks, Alpha Natural Resources, Consol Energy and Peabody Energy plunged 10.5 percent, 6.0 percent and 4.0 percent, respectively, after their peer, Patriot Coal, stated that it would idle production in five southern West Virginia mines, amid weaker demand for metallurgical coal in the export market. Charles Schwab lost 2.5 percent, after a broker downgraded its rating on the stock to “Market-Perform” from “Out-Perform”. Among other stocks, CF Industries Holdings and TripAdviser gained 3.8 percent and 3.7 percent, respectively.

European Stocks: Likely to open in negative territory
The DAX and CAC are expected to open 25 to 29 points and 13 to 15 points lower, respectively.
German Wholesale Price Index and Swiss Producer & Import Prices are the key economic indicators scheduled for release today.
No major corporate releases are scheduled for release today.
S&P has downgraded its long term ratings on France and Austria to “AA+” from “AAA”, while ratings on Malta, Slovakia, and Slovenia have been lowered by one notch. Cyprus, Italy, Portugal and Spain have been downgraded by two notches, while long-term ratings have been affirmed on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.
Genentech Inc., a unit of Roche Holding AG, is facing the first trial of patients’ claims that its withdrawn Raptiva psoriasis drug resulted in fatal infections in some users.
Austrian newspaper, Die Presse, has reported that France Telecom SA and its partner, Mid Europa, are selling their mobile unit, Orange Austria, to Hutchison Whampoa Ltd. for about €1.0 billion.
Automotive News Europe has reported that Daimler AG’s Mercedes-Benz unit expects to introduce four new compact cars over the next three years to boost sales in the US by 20.0 percent.
Hochtief AG has stated that the sale of its airports business remains a strategic goal, despite not reaching a deal in 2011, as expected.

Macro Update
S&P downgrades France and other Eurozone countries
S&P has lowered its long-term credit rating on France and Austria to “AA+” from “AAA”. The ratings agency has also downgraded its long-term ratings on Cyprus, Italy, Portugal and Spain by two levels; Malta, Slovakia, and Slovenia by one notch and has affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.
Faster fiscal reforms needed, says Merkel
Angela Merkel, the German Chancellor, has urged for quicker implementation of the European fiscal deal, following S&P’s credit ratings downgrade of nine Eurozone countries.
UK house prices decline
Rightmove has indicated that, on a month-on-month basis, the U.K. house price index fell 0.8 percent in January, compared to a 2.7 percent drop recorded in December.
Japanese core machine orders surge
On a seasonally adjusted monthly basis, Japan’s core machine orders soared 14.8 percent in November, compared to a 6.9 percent decline recorded in October.
Japan’s CGPI advances
On a month-on-month basis, the Corporate Goods Price Index (CGPI) in Japan climbed 0.1 percent in December, compared to the downwardly revised flat reading recorded in November.

Economic Calendar

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Corporate Calendar