Market Preview - 17 July 2012; Bernanke's testimony in focus

Forex Overnight: USD trading lower
The USD is trading weak against the majors this morning ahead of the Federal Reserve (Fed) Chairman, Ben Bernanke’s testimony scheduled later in the day, which is expected to provide insights on the central bank’s stance on additional easing. Meanwhile, investors await the release of the German ZEW economic sentiment index which is expected to show further deterioration for July. At 5 am GMT, the EUR and the GBP are trading 0.2 percent and 0.3 percent higher against the USD at $1.2294 and $1.5664, respectively.
The AUD has climbed 0.6 percent against the USD after the minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting indicated no requirement of further interest rate adjustments following evidence of stronger domestic growth.

UK Stocks: Likely to open in the green
The FTSE 100 is expected to open 18 to 19 points firmer.
Consumer Price Index (CPI), Retail Price Index and DCLG House Price Index are the key economic indicators scheduled for release today.
IG Group Holdings, Computacenter, Low & Bonar, Schroder Real Estate Investment Trust and Amino Technologies are scheduled to announce their results today.
The US Senate Permanent Subcommittee has revealed that HSBC Holdings had allowed drug traffickers, terrorists and rogue states to launder money due to poor controls.
Rio Tinto has awarded a contract worth $317.0 million to Ansaldo STS Australia to build an automated train management system for the company’s heavy-haul iron ore rail network in Western Australia's Pilbara region.
The Times of India has reported that Pearson and a few private equity firms have approached Manipal Global, an Indian education services company, to acquire a stake in it.

Asia: Trading firmer
Asian markets are trading in the green this morning after the International Monetary Fund (IMF) raised its economic growth forecast on Japan and amid speculation of further monetary easing by China and the US.
In Japan, Sony Financial Holdings, MS&AD Insurance Group Holdings and Daiwa Securities Group have advanced after the IMF raised its growth outlook on Japan. Astellas Pharma has risen following a broker upgrade. On the other hand, Hokuriku Electric Power, Kansai Electric Power and Tokyo Electric Power have slumped amid reports that the Japanese government would cap its planned increase in electricity rate. JX Holdings has declined after it stated that it will shut all processing units at one of its plants. At 5 am GMT, the Nikkei 225 index has risen 0.8 percent to trade at 8,792.5.
In Hong Kong, HSBC Holdings has risen despite allegations by a US Senate panel that the bank’s staff ignored warnings of money laundering activity at the bank. In South Korea, Hyundai Heavy Industries has gained value after it sold a stake worth KRW 704.8 million in Hyundai Motor. NCsoft Corporation has edged higher following positive broker comments. In China, CSR Corporation and China CNR Corporation have advanced after the Chinese government augmented a railway infrastructure investment plan for this year.

US Stocks: Futures trading higher
At 5 am GMT, S&P 500 futures are trading 6.4 points firmer.
CPI, Manufacturing & Industrial Production, Capacity Utilisation, NAHB Housing Market Index and Net Long-Term & Total TIC Flows are the key economic indicators scheduled for release today. Additionally, investors await the Fed Chairman, Ben Bernanke’s testimony before the Senate.
Johnson & Johnson, Coca-Cola Company, Intel Corporation, Goldman Sachs Group, CSX Corporation, Yahoo! Inc. and Fidelity National Information Services are scheduled to announce their results today.
Yahoo! Inc. climbed 2.1 percent in the after hours trading session yesterday after it appointed Marissa Mayer, a veteran Google Inc. executive, as its new CEO with immediate effect. Digital Generation rallied 21.9 percent after it announced that it is exploring a number of strategic options, including sale. On the downside, a weaker-than-expected outlook for the second quarter led Flir Systems to drop 2.1 percent. Mattress Firm Holding Corporation plunged 12.7 percent after it lowered its full year guidance for revenue and same-store-sales. J.B. Hunt Transport Services declined 3.7 percent after its second quarter revenue trailed market expectations. A cautious view over fiscal year 2013 led Cintas Corporation to drop 1.0 percent.
Yesterday, the S&P 500 index edged 0.2 percent lower after the IMF lowered its global growth forecast for 2013 and data indicated an unexpected decline in US retail sales in June. Alpha Natural Resources tumbled 10.2 percent after a broker lowered its rating on the stock to “Under-perform” and also cut its price target on the stock. Dean Foods Company plunged 7.6 percent following a broker downgrade on the stock to “Market-perform” from “Out-perform”. Mead Johnson Nutrition Company plummeted 5.2 percent following a downgrade by a broker to “Sector-perform” and a reduction in its price estimate on the stock. On the contrary, First Solar surged 5.7 percent after it installed an additional 100 megawatts at its Arizona solar power plant. Gannett Company and Citigroup jumped 2.7 percent and 0.6 percent, respectively, on the back of better-than-expected second quarter profit.

European Stocks: Expected to open firmer
The DAX and CAC are likely to open 33 to 35 points and 20 to 22 points higher, respectively.
Eurozone ZEW Survey - Economic Sentiment Index and German ZEW Survey - Current Situation & Economic Sentiment Indices are the key economic indicators scheduled for release today.
Atlas Copco AB, Svenska Handelsbanken AB, Georg Fischer AG, Alfa Laval AB and Lindab International AB are scheduled to report their results today.
Moody’s Investors Service has downgraded its long-term debt and deposit rating on 10 Italian banks including UniCredit SpA, Intesa Sanpaolo SpA and Banca IMI, and issuer ratings for three financial institutions. The outlook on all these banks and financial institutions is “Negative”.
Novartis AG has won an US antitrust approval to buy Fougera, a generic dermatology products maker.

Macro Update
IMF approves aid to Portugal
The IMF has approved around a €1.5 billion loan disbursement to Portugal and has urged the nation to follow strong policies and reforms.
Evidence of stronger domestic growth, indicate RBA minutes
The minutes of the RBA's latest policy meeting have indicated that board members saw no need for any further adjustment to the cash rate as data released over the previous month suggested that the nation’s economy had a little more momentum than had earlier been indicated.
Fed’s monetary policy “tremendously accommodative”, says George
Esther George, the Kansas Fed President, has opined that US economic growth probably will not exceed 2.0 percent in 2012 and viewed the monetary policy as tremendously accommodative.
China’s FDI declines more-than-expected
On an annual basis, the Foreign Direct Investment (FDI) in China has declined 6.9 percent to $12.0 billion in June, more than market consensus and compared to a 0.1 percent rise reported in May.
New Zealand’s consumer price inflation cools
The annual consumer price inflation in New Zealand has eased to 1.0 percent in the second quarter of 2012 compared to a 1.6 percent rate recorded in the earlier quarter.
Australian new car sales decline
On a seasonally adjusted monthly basis, new motor vehicle sales in Australia have declined 0.6 percent in June following a revised 2.3 percent rise posted in May.

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