Market Preview - 17 January 2012

Forex Overnight: USD trading lower
The USD has weakened against the majors, this morning, after a slew of positive economic releases in China including Gross Domestic Product (GDP), industrial production and retail sales, prompted investors to move towards high yield currencies. Meanwhile, following yesterday’s Standard & Poor’s (S&P) downgrade of the European Financial Stability Facility (EFSF), the market awaits the outcome of bond auctions by the EFSF, Spain and Greece. At 6 am, the EUR has gained 0.5 percent against the USD to trade at $1.2735, while it has advanced 0.2 percent against the GBP to trade at £0.8285.
The JPY has strengthened 0.2 percent against the USD, while it has lost 0.4 percent against the EUR.
The AUD has surged 0.8 percent against the USD, after data indicated that Chinese GDP advanced more-than-expected in the fourth quarter.

UK Stocks: Expected to open in the green
The FTSE 100 index is likely to open 37 points in positive territory.
DCLG House Prices, Consumer Price Index, Retail Price Index and Leading Indicator Index are the key economic indicators scheduled for release today. Additionally, investors await the Bank of England Governor, Mervyn King’s speech.
IG Group Holdings and OJSC Transcontainer are scheduled to announce their results today.
According to Reuters, Bank of Ayudhya has delayed the purchase of HSBC Holdings’ Thai credit card and retail unit to the end of January 2012.
Rio Tinto has reported a lower-than-expected 2.0 percent annual rise in its fourth quarter iron ore production and raised its 2012 capital expenditure guidance.
Royal Bank of Scotland Group has agreed to sell its aviation unit to a group led by Japan's Sumitomo Mitsui Financial Group Inc. for about $7.3 billion.
Tesco has entered into a partnership with Fawaz Abdulaziz Al Hokair & Company in Saudi Arabia to create a new franchise model as it looks to convert its F&F fashion label into a major global brand.

Asia: Trading in positive territory
Asian markets are trading in the green, this morning, after data indicated that Chinese economy expanded more-than-expected in the fourth quarter.
In Japan, Sumitomo Mitsui Financial Group has advanced, after it won a bid to acquire Royal Bank of Scotland Group’s aircraft-leasing unit. Taiyo Yuden has jumped, after a broker raised its rating on the stock to “Neutral” from “Sell”. Carmakers, Nissan Motor, Honda Motor and Toyota Motor are also trading in positive territory. At 6 am, the Nikkei 225 index has gained 1.1 percent to trade at 8,471.0.
In Hong Kong, Hutchison Whampoa has advanced, amid news that it is finalising a deal to buy Orange Austria for a consideration of about €1.40 billion. Financial sector stocks, Industrial and Commercial Bank of China, Bank of China, HSBC Holdings have climbed, as risk appetite amongst investors improved. In South Korea, Hyundai Merchant Marine has risen, amid news that it has been named the preferred bidder for the Banyan Tree Club & Spa Seoul luxury property. In China, Jiangxi Copper and Petrochina are trading higher, tracking the movement in commodity prices.

US Stocks: Futures trading in the green
At 6 am, S&P 500 futures are trading 6.0 points higher.
NY Empire State Manufacturing Index is the key economic indicator scheduled for release today.
Wells Fargo & Company, Citigroup, M&T Bank and Forest Laboratories are scheduled to announce their results today.
U.S. markets were closed yesterday on account of Martin Luther King Jr. Birthday.

European Stocks: Likely to open firmer
The DAX and CAC are expected to open 25 points and 12 points higher, respectively.
German ZEW Survey - Current & Economic Situation Indices, Eurozone Consumer Price Index & ZEW Survey - Economic Sentiment Index and Swiss ZEW Survey - Expectations Index are the key economic indicators scheduled for release today.
SEB SA, Accor SA, Barry Callebaut AG, Manutan International SA and Euronav NV are scheduled to report their results later today.
S&P has downgraded its long term credit rating on the EFSF to “AA+” from “AAA”.
According to Bloomberg, a clinical trial has shown that combining GlaxoSmithKline’s Tykerb drug with Roche Holding AG’s Herceptin drug is almost twice as effective to treat breast cancer compared to a single drug therapy.
BMW AG has stated that it is recalling 235,000 Mini models worldwide, due to a technical fault in the electric water pump.

Macro Update
S&P downgrades Eurozone’s bailout fund
S&P has downgraded its long-term issuer credit rating on the EFSF, the Eurozone’s rescue fund, to “AA+” from “AAA”.
Chinese economy expands more-than-expected
On a year-on-year basis, China’s GDP has climbed 8.9 percent in the fourth quarter of 2011, higher than market consensus, and compared to a 9.1 percent growth recorded in the third quarter of 2011.
Chinese industrial production, retail sales rise unexpectedly
Chinese industrial production has unexpectedly climbed 12.8 percent Y-o-Y in December, following a 12.4 percent increase recorded in November. Separately, Chinese retail sales have surprisingly advanced 18.1 percent Y-o-Y in December, compared to a 17.2 percent rise recorded in November.
Japan’s tertiary industry activity falls
On a seasonally adjusted monthly basis, the Tertiary Industry Activity Index in Japan has declined 0.8 percent in November, compared to an upwardly revised 0.7 percent rise reported in October.

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