Market Preview - 16 November 2011

Forex Overnight: EUR trading under pressure
The EUR is trading lower against the major currencies, this morning, as rising borrowing costs for Eurozone sovereigns heightened concern about the contagion effect of the debt crisis. Additionally, investors remain cautious, ahead of the Spanish and French bond auction scheduled for tomorrow. At 6 am, the EUR has declined 0.7 percent and 0.4 percent against the USD and the GBP, to trade at $1.3444 and £0.8528, respectively.
The JPY has advanced 0.8 percent and 0.1 percent against the EUR and the USD, respectively. The Bank of Japan (BoJ) has kept its key interest rates unchanged, and indicated that the nation’s economic activity has continued picking up, but at a more moderate pace.
The AUD has lost 1.0 percent against the USD, following a decline in the Australian manufacturing activity index in the third quarter.

UK Stocks: Likely to open weaker
The FTSE 100 is expected to open 32 points in negative territory.
ILO Unemployment Rate, Jobless Claims Change, CBI Trends Total Orders and Average Weekly Earnings are the key economic indicators scheduled for release today. Additionally, investors await the Bank of England’s Inflation Report and Governor, Mervyn King’s speech.
ICAP, London Stock Exchange Group, UK Mail Group, United Drug and Speedy Hire are scheduled to announce their results today.
BHP Billiton has approved a $698.0 million investment to develop its Orebody 24 iron ore mine near Newman in Western Australia.
According to Reuters, Vodafone is eyeing the acquisition of Dutch telecom firm, KPN’s Spanish low budget and pre-paid mobile phone service, Simyo.
The Business Week has reported that BP's Whiting refinery in Indiana has restarted a crude distillation unit and a coking unit, after a two-week overhaul.

Asia: Trading in the red
Asian markets are trading in negative territory, as rising Italian, Spanish, Belgian and French bond yields, sparked concern over the contagion effect of the European debt crisis.
In Japan, Nomura Holdings and Daiwa Securities Group have retreated, as risk appetite amongst investors waned. On the other hand, Olympus has surged, amid growing optimism that the company will avoid delisting. At 6 am, the Nikkei 225 index is trading 0.9 percent lower at 8,462.5.
In Hong Kong, China Construction Bank Corporation has eased, despite reports indicating that the Singapore sovereign investment fund, Temasek Holdings Pte Ltd., and several Chinese state-affiliated firms had acquired the company’s shares recently sold off by Bank of America Corporation. China Eastern Airlines Corporation and Air China are trading lower, after a broker downgraded its rating on China’s airline industry to “Neutral” from “Positive”. In South Korea, Hynix Semiconductor has gained, amid news that Amazon's Kindle Fire tablet uses the company’s components. In China, Poly Real Estate Group Company has lost value, amid reports that Chinese real-estate companies are facing large loan repayments, after borrowing at high interest rates.

US Stocks: Futures trading lower
At 6 am, S&P 500 futures are trading 14.4 points weaker.
Consumer Price Index (CPI), Industrial Production, NAHB Housing Market Index, Net Long-term and Total Net TIC Flows and MBA Mortgage Applications are the key economic indicators scheduled for release today.
Target Corporation, Tyco International, Applied Materials, NetApp and Limited Brands are scheduled to announce their results later today.
Agilent Technologies declined 3.1 percent in the after hours trading session yesterday, after its first quarter earnings guidance fell short of market estimate. Dell eased 0.5 percent, after its third quarter revenue missed market consensus, and the company warned that revenue for the full year was “trending to the lower end” of its previous forecast. On the other hand, Autodesk climbed 1.9 percent, on the back of better-than-expected third quarter results. Amongst other gainers, Exelixis, MannKind and Hillenbrand climbed 5.9 percent, 4.9 percent and 4.1 percent, respectively.
The S&P 500 index edged up 0.5 percent in the regular trading session yesterday, after data indicated that U.S. retail sales climbed in October, and manufacturing activity in the New York region improved in November. Additionally, market speculation that Mario Monti will succeed in forming a new government in Italy also spurred optimism amongst investors. Intel Corporation climbed 2.9 percent, after Berkshire Hathaway announced that it has invested in the company. Amongst other technology sector stocks, Broadcom Corporation, Hewlett-Packard and Cognizant Technology Solutions advanced 4.1 percent, 3.4 percent and 2.9 percent, respectively. Jacobs Engineering Group, the top gainer on the S&P 500 index, jumped 7.9 percent, after the company indicated that it has an opportunity to return to strong double-digit growth. Bank of America rose 1.3 percent, after it announced that it is ahead of schedule on plans to boost its balance sheet and meet new international standards. On the other hand, Wal-Mart Stores declined 2.4 percent, after its third quarter earnings trailed market expectation.

European Stocks: Expected to open in negative territory
The DAX and CAC are likely to open 51 points and 19 points lower, respectively.
Eurozone CPI for October is the key economic indicator scheduled for release today.
Vivendi SA, Infineon Technologies AG, Dfds A/S and Solar A/S are scheduled to report their results later today.
GDF Suez SA has stated that it would reassess its entire nuclear strategy in Belgium between now and mid-2012, following plans by the Belgian government to raise the tax on the nuclear power industry to €550.0 million.
The Nikkei business daily has reported that Nissan Motor Company Limited and Daimler AG are finalising plans to jointly assemble passenger vehicles in Mexico, for sale mainly in the North American market.
Ex-UBS Chairman, Peter Kurer, has stated that UBS AG and Credit Suisse Group AG should split off their investment banks to regain the trust of investors and clients.
UCB SA has stated that it has entered into strategic partnerships with PAREXEL International Corporation and PRA International for all its new clinical study programs globally.

Macro Update
BoJ holds interest rate
The BoJ policy members have, as expected, unanimously voted to keep the key interest rate unchanged, in the range of 0.0 to 0.1 percent. The central bank has stated that the economy will face an adverse effect from the slowdown in the global economy, the appreciation of the yen and the flooding in Thailand.
Australia’s wage price index growth slows
On a seasonally adjusted sequential basis, wage price index in Australia has advanced 0.7 percent in the third quarter of 2011, compared to a 0.9 percent rise recorded in the second quarter of 2011.
Australia’s manufacturing activity index declines
The National Australia Bank’s Manufacturing Activity Index has dropped to a reading of -0.9 in the third quarter of 2011, compared to a reading of 0.2 recorded in the second quarter of 2011.
Europe making gradual progress on crisis, says Geithner
Timothy Geithner, the U.S. Treasury Secretary, has stated that Europe was making gradual progress in handling its financial crisis, and reiterated that a solution was within its capacity.
Foreign Direct Investment in China rises
On an annual basis, Foreign Direct Investment in China climbed 8.8 percent to $8.33 billion in October, compared to a 7.9 percent increase recorded in the previous month.

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