Market Preview - 18 January 2012

Forex Overnight: EUR trading firmer
The EUR has climbed against the majors, this morning, amid reports that Greece is nearing a deal on its debt with private bondholders.The Greek Prime Minister, Lucas Papademos, is set to resume negotiations with the private bondholders today. Market participants are also keeping an eye on the outcome of German and Portuguese debt auctions slated later today. Additionally, market expectations of positive U.S. industrial production and homebuilder confidence data, scheduled later today, has buoyed market sentiment towards high yield currencies. At 6 am, the EUR has gained 0.3 percent against the USD to trade at $1.2769, while it has advanced 0.2 percent against the GBP to trade at £0.8321.
The AUD has strengthened 0.1 percent against the USD, after data indicated that the consumer confidence index in Australia improved in January.

UK Stocks: Expected to open broadly lower
The FTSE 100 is likely to open 11 points lower to 6 points higher.
Key economic indicators scheduled for release today include Claimant Count Rate, ILO Unemployment Rate and CBI Business Optimism Index.
African Barrick Gold is scheduled to report its results later today.
BHP Billiton has stated that the estimated mineral resource tonnage at its Spence mine in northern Chile has increased by almost 700.0 percent.
KBR Inc. has stated that it has been awarded a contract from Rio Tinto to upgrade the fuel storage system.
BTG has won U.S. Food and Drug Administration’s approval for its drug, Voraxaze, to mitigate the toxic effects of a cancer treatment.
The Daily Telegraph has reported that the private equity firm, Cinven, has signed a deal with Intermediate Capital Group to acquire its patent business, CPA Global, for a consideration of £950.0 million.

Asia: Trading mostly higher
Asian markets are trading mostly higher this morning, taking cues from overnight gains on Wall Street.
In Japan, Tokyo Electric Power has rallied, after it stated that it will raise electricity rates for corporate customers in April. Elpida Memory has surged, amid news that the company would seek a capital tie-up with Micron Technology. Energy sector stocks, Japan Petroleum Exploration, JX Holdings and Inpex Corporation have gained value, in line with the rise in crude oil prices. At 6 am, the Nikkei 225 index has gained 1.1 percent to trade at 8,556.5.
In South Korea, Celltrion has risen, after a regulatory filing indicated that it expects to report KRW 250.7 billion operating profit in 2012. Daewoo International Corporation has advanced, after a regulatory filing indicated that the company’s net income surged significantly. In Hong Kong, financial sector stocks, Hang Seng Bank, Bank of China and HSBC Holdings are trading higher. In China, China Merchants Property Development and RiseSun Real Estate Development have declined, after data indicated that new home prices in 52 of the 70 Chinese cities monitored by the government, dropped in December.

US Stocks: Futures trading higher
At 6 am, S&P 500 futures are trading 3.2 points firmer.
Producer Price Index, Industrial Production, Net Long-term TIC Flows & Total Net TIC Flows, NAHB Housing Market Index and MBA Mortgage Applications are the key economic indicators scheduled for release today.
Goldman Sachs Group, eBay Inc, Bank of New York Mellon, Charles Schwab and F5 Networks are scheduled to announce their results today.
Yahoo! Inc. climbed 2.7 percent in the after hours trading session yesterday, following the announcement that its co-Founder, Jerry Yang, has resigned from the company’s board. Linear Technology advanced 8.3 percent, after it issued a better-than-expected revenue guidance for the third quarter. XOMA Corporation advanced 8.3 percent, after it acquired the U.S. rights to market blood-pressure treatment franchise from the French pharmaceutical company, Les Laboratoires Servier. On the other hand, Research In Motion declined 5.6 percent, after Samsung stated that it is not interested in acquiring the company. A substantial decline in its second quarter profit and a weak profit outlook for the third quarter led Cree 4.6 percent lower.
The S&P 500 edged 0.4 percent higher, in the regular trading session yesterday, after data indicated that manufacturing activity in the New York region expanded in January at the fastest pace in nine months. Sears Holdings Corporation surged 9.5 percent, amid speculation that the company may seek to go private. Energy sector stocks, Pioneer Natural Resources, Marathon Petroleum and Marathon Oil climbed 1.6 percent, 1.5 percent and 1.5 percent, respectively, tracking firmer crude oil prices. Kraft Foods edged 1.0 percent up, after it stated that it would realign its U.S. sales organisation and cut jobs in North America throughout 2012, in a move to divide its snacks and grocery businesses. Wells Fargo added 0.7 percent, after its fourth quarter profit surpassed market expectation. On the contrary, Citigroup dropped 8.1 percent, after it reported an unexpected decline in its fourth quarter earnings. Carnival tumbled 13.7 percent, following the weekend capsizing of its cruise ship, Costa Concordia, off the coast of Italy.

European Stocks: Likely to open mixed
The DAX is expected to open 2 to 8 points higher, while the CAC is likely to open 3 to 7 points in the red.
Eurozone Construction Output and Swiss ZEW Survey-Expectations Index are the key economic indicators scheduled for release today.
ASML Holding NV, Kaufman & Broad SA, Hymer AG and Austriamicrosystems AG are scheduled to announce their results today.
According to Business Standard, L Capital Asia, the private equity arm of LVMH SA, is in discussion with Indian retailer, Fabindia, to acquire a minority stake in it.
Aabar Investments PJS, the Abu Dhabi-based sovereign wealth fund, has stated that it plans to increase its stake in UniCredit SpA to 6.5 percent.
According to Reuters, national competition regulators in the European Union have backed a recommendation to block a merger of Deutsche Boerse AG and NYSE Euronext.
The Dow Jones Newswires has reported that Commerzbank AG aims to cover its €5.3 billion capital shortfall without state aid and without offloading Eurohypo, its commercial real-estate and public financing unit.
Deutsche Lufthansa AG has confirmed that the fleet of Jade Cargo, its Chinese joint venture, is still grounded.

Macro Update
World Bank lowers global growth forecast
The World Bank has stated that it expects the global economy to expand 2.5 percent and 3.1 percent in 2012 and 2013, respectively, compared to the earlier expectation of a 3.6 percent growth for each year.
Australia’s new vehicle sales drop
On a seasonally adjusted monthly basis, new motor vehicles sales in Australia have declined 2.9 percent in December, following a 0.7 percent drop recorded in November.
Australian consumer confidence improves
The Westpac/Melbourne Institute consumer confidence index in Australia has climbed to a reading of 97.1 in January, compared to a reading of 94.7 reported in December.
China’s FDI declines
The Foreign Direct Investment (FDI) in China has dropped 12.7 percent Y-o-Y to $12.2 billion in December.
House prices in China decline
On a monthly basis, new home prices in China’s 52 of the 70 cities monitored by the government, dropped in December, compared to a decline in 49 cities recorded in November.

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