Market Preview - 17 November 2011

Forex Overnight: EUR trading stronger
The EUR is trading higher against most of its major counterparts, this morning, ahead of today’s auction of Spanish and French government debt worth about €4.0 billion and €8.2 billion, respectively. Meanwhile, a mixed set of economic reports are expected in the U.S. later today, with data anticipated to show that manufacturing activity in the Philadelphia region expanded in November, while housing starts fell in October. At 6 am, the EUR has advanced 0.3 percent and 0.2 percent against the USD and the GBP, to trade at $1.3507 and £0.8572, respectively.
The JPY has advanced marginally against the USD, while it has lost 0.3 percent against the EUR.
The CAD and the AUD have gained 0.3 percent and 0.2 percent against the USD, respectively.

UK Stocks: Expected to open weaker
The FTSE 100 is likely to open 35 points in the red.
Retail sales for October is the key economic indicator scheduled for release today.
SABMiller, National Grid, Investec and WS Atkins are scheduled to report their results later today.
The Financial Times has reported that Royal Dutch Shell has backed out of oil-development talks with the Kurdistan regional government, in an effort to protect attractive investment opportunities in southern Iraq, including a potential $17.0 billion natural gas deal.
Jacques Nasser, the Chairman of BHP Billiton, has stated that the company will continue to pursue acquisitions from “time to time” when they make strategic sense.
The Apple Daily has reported that HSBC Holdings is planning to exit its retail banking business in five Asian markets, including Japan and South Korea.
Tullow Oil is set to receive final approval from Uganda’s government, for the sale of stakes in one of Africa’s most promising oil prospects, worth $2.9 billion, to Total SA and Cnooc Limited.

Asia: Trading mostly higher 
Asian markets are trading in positive territory, this morning.
In Japan, TDK Corporation has climbed, following news that it had entered into an agreement to supply hard disk-drive components to Western Digital Technologies. Olympus Corporation is trading sharply higher, amid receding fears about its possible delisting. Meanwhile, Nippon Life Insurance, its top shareholder, stated that it has cut its stake in the company to 5.11 percent from 8.18 percent. On the other hand, Nissan Motor Company is trading lower, after European Automobile Manufacturers’ Association reported lower auto sales in some European countries.  At 6 am, the Nikkei 225 index is trading 0.2 percent higher at 8,483.5.
In Hong Kong, Industrial & Commercial Bank of China and Bank of Communications Company have declined, as risk appetite amongst investors waned. In South Korea, Hynix Semiconductor has gained, after it, along with Micron Technology, won a price-fixing lawsuit filed against them by Rambus. Lotte Shopping Company has recorded a fall, after it reported a substantial decline in its third quarter net income. In China, China Vanke has dropped, amid reports that it may reduce prices by more than 20.0 percent at the end of this week, for all of its home projects in Shanghai.

US Stocks: Trading firmer
At 6 am, S&P 500 futures are trading 7.2 points in the green.
Initial and Continuing Jobless Claims, Housing Starts, Building Permits, Philadelphia Fed Manufacturing Survey, and MBA Mortgage Foreclosures & Delinquencies are scheduled for release today.
Salesforce.com, Intuit, Ross Stores, GAP, Dollar Tree, J M Smucker Company, Sears Holdings Corporation and GameStop Corporation are scheduled to announce their results later today.
NetApp tumbled 7.0 percent, in the after hours trading session yesterday, after it issued a downbeat outlook for the third quarter. Applied Materials dropped 2.5 percent, after it forecast a lower-than-expected first quarter adjusted earnings. On the other hand, Hot Topic climbed 6.4 percent, on the back of upbeat third quarter profit. HollyFrontier Corporation jumped 2.3 percent, after its board approved a 14.0 percent hike in its quarterly dividend and also issued its second special dividend of the year.
The S&P 500 index declined 1.7 percent, in the regular trading session yesterday. Banking sector stocks, Morgan Stanley, Goldman Sachs Group and Bank of America retreated 8.0 percent, 4.2 percent and 3.6 percent, respectively, after Fitch Ratings warned that further contagion from Europe’s debt crisis would pose a threat to U.S. banks. Oil refiners, Marathon Petroleum Corporation and Valero Energy Corporation plunged 11.7 percent and 9.3 percent, respectively, amid concerns that the reversal of the Seaway crude pipeline would impact their profit margins. Abercrombie & Fitch Company, the top laggard on the S&P 500 index, slumped 13.6 percent, after its third quarter earnings trailed market expectations. Dell declined 3.2 percent, hit by weak third quarter revenue. On the other hand, Micron Technology surged 23.4 percent, as a jury dismissed claims that the company had conspired with Hynix Semiconductor to fix the prices of computer memory chips. Western Digital advanced 7.1 percent, following the finalisation of a supply agreement with TDK Corporation for hard-disk drive components.

European Stocks: Likely to open in negative territory
The DAX and CAC are expected to open 76 points and 38 points weaker, respectively.
Eurozone’s Construction Output and Swiss ZEW survey (Expectations) are the key economic indicators scheduled for release today.
Oesterreichische Post AG, Wirecard AG, Koninklijke BAM Groep NV and Air Berlin are scheduled to announce their results today.
According to the Financial Times, UBS AG has revealed that it suffered unauthorised trading on the African desk of its U.K. wealth management division in 2007, and has initiated an in-depth review of its compliance procedures.
Federico Ghizzoni, the CEO of UniCredit SpA, has urged the European Central Bank to provide better funding access to Italian banks, by widening the type of collateral offered.
Reuters has reported that one of the two frontrunners for the designation of the CEO of Metro AG, Joel Saveuse, has signalled that he could step back.

Macro Update
UK consumer confidence index slumps
The Nationwide Building Society has indicated that its consumer confidence index in the U.K. has dropped to a reading of 36.0 in October, the lowest level since May 2004, compared to a reading of 45.0 in September.
China’s leading index rises
The Conference Board’s leading economic indicator for China has climbed 0.4 percent in September to a reading of 106.2, slower than the upwardly revised 0.6 percent rise posted in the previous month.
Europe recession not catastrophic for Australia, says RBA’s Edwards
John Edwards, a recently-appointed board member of the Reserve Bank of Australia (RBA), has stated that a likely recession in Europe will not seriously jeopardise growth in Australia and Asia as a whole.
Spain lowers growth forecast
Elena Salgado, the Finance Minister of Spain, has stated that the economy will grow about 0.8 percent this year, less than the government’s earlier expectations of a 1.3 percent growth.
Fed’s Lacker worried about money market funds
Jeffrey Lacker, the President of the Federal Reserve Bank (Fed) of Richmond, has stated that he believes that banks can withstand an escalation of the European debt crisis, but the future of money market funds is worrisome. He further raised concern about the possibility of upside risks to inflation.

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