Market Preview - 20 June 2011

UK Stocks: Likely to open lower
UK markets are likely to open lower, with the FTSE 100 expected to open 24 points lower.
Green Compliance and F&C Global Smaller Companies are scheduled to report their results later today
BHP Billiton has indicated that it is considering ways to improve economic and environmental issues at its Yeelirrie uranium prospect in Australia, and that it is committed to developing the project.
The Financial Times has reported that Cable & Wireless Worldwide might divest most of its international assets, and that a Hong Kong and Singapore based telecom company, Pacnet, has made an informal offer the assets.
The Sunday Telegraph has reported that the Chief Executive Officer of Lloyds Banking Group, Antonio Horta-Osorio, has announced plans to prioritise its Halifax unit, following a review of its strategy.
Rolls-Royce has signed an agreement to be the exclusive engine provider for an enhanced version of the Airbus A350-100 aircraft.
According to Bloomberg, Royal Dutch Shell and partner Mitsubishi Corporation are preparing to begin a delayed $12.5 billion natural-gas project in Iraq.

Asia: Trading mostly lower
Asian markets are trading mostly lower this morning.
In Japan, Tokyo Electric Power and Kansai Electric Power are trading higher, after the Japanese Trade Minister stated that they may let utilities restart nuclear generators that had been shut for routine maintenance. Mazda Motor is trading higher, after it stated that it would return to profit in the current fiscal year. At 6 am, the Nikkei is trading 0.4% higher at 9,385.5.
In South Korea, Shinsegae is trading lower, after a broker downgraded its rating to “Hold” from “Buy”. In Hong Kong, Sun Hung Kai Properties is trading lower, after Walter Kwok, a former Chairman, forecast a drop in city’s property prices by the end of the year.  In China, markets are trading lower, after a broker indicated that the nation’s economy is heading for a “sluggish landing”. Industrial & Commercial Bank of China is trading lower, after a broker lowered its recommendation to “Under-weight” from “Over-weight”. PetroChina is trading lower, tracking the movement in crude oil prices.

US Stocks: Futures trading lower
US stock index futures are trading lower at 6am, with the S&P 500 Index futures down 5.5 points.
In  corporate releases, Ennis and Renren would announce their results today.
In after hours trade on Friday, Synta Pharmaceuticals and MannKind gained 7.4% and 5.4%, respectively. Deer Consumer Products surged 5.5%, after the company affirmed its previously issued guidance for 2011. B&G Foods, Life Partners Holdings, and BPZ Resources lost 4.9%, 4.8%, and 1.4%,  respectively.
On Friday, the S&P 500 index gained 0.3%, as worries over the Eurozone eased. Scripps Networks Interactive was the leading gainer, up 5.9%, after the company’s largest shareholder, the Edward W. Scripps Trust, filed a petition to prepare for the administration of the Trust. CB Richard Ellis Group climbed 4.7%. Financial sector stocks, First Horizon National, Zions Bancorporation, Morgan Stanley, Suntrust Banks, Genworth Financial and Keycorp advanced 3.9%, 3.4%, 3.1%, 3.1%, 2.8% and 2.7%, respectively, as investors showed higher risk appetite. Moody's, down 5.0%, was the worst performer, after being downgraded by an analyst. Retail sector stocks, AutoNation, Sears Holdings and Best Buy soared 4.6%, 3.7% and 3.3%, respectively.  Technology sector stocks, Google, F5 Networks and Advanced Micro Devices dropped 3.1%, 2.9% and 2.6%, respectively.

European Stocks: Expected to open lower
European markets are expected to open lower. The DAX is likely to open 28 points lower, while the CAC is expected to open 28 points lower.
Investors await German Producer Price Index, Euro-zone’s Current Account and Euro-zone’s Labour Cost changes.
EGL and Pironet NDH are scheduled to report their results later today.
The CEO of EADS, Louis Gallois, has indicated that acquisitions are key to the company’s growth strategy, and that it is pursuing companies with a significant presence in North America.
Nikkei has reported that Japan’s IHI Corporation, Mitsubishi Heavy Industries and Kawasaki Heavy Industries would jointly develop an engine for Airbus, for its A320 Neo passenger aircraft.
The Sunday Times has reported that Ferrovial is in talks with a US infrastructure investor, Alinda Capital Partners, to sell its 10.0% stake in BAA Airports.
The Sunday Times has reported that Qatar Holding is in talks to buy a stake in Banco Santander’s UK unit.
The CEO of Nestle has indicated that the company expects the upward trend in raw material prices to persist, though it would maintain its raw material price exposure at around 8% to 10% in 2011 through improved efficiencies and cost reduction.
According to Reuters, MAN’s CEO has told a German daily that the company plans to reach an agreement with Abu Dhabi's IPIC fund over industrial services company, Ferrostaal, “as soon as possible".

Forex Overnight: EUR is trading lower
The EUR is trading lower against the USD this morning, after EU finance ministers decided to withhold the €12.0 billion loan to Greece, and linked it to Greek parliament’s backing of the new austerity plans.
The JPY is trading 0.2% lower against the USD, after data showed that Japanese exports fell more-than-expected in May.
At 6am, the EUR is trading 0.6% lower against the USD at $1.4228, while the GBP is trading 0.4% lower against the USD at $1.6124. The EUR is trading 0.2% lower against the GBP at £0.8825.
The AUD is trading 0.6% lower against the USD, amid market worries over the situation in Greece.

Macro Update
OECD's Gurria does not foresee a global double-dip
Angel Gurria, the secretary-general of the OECD, has stated that though recovery is going to be a little softer than initially thought, global economy is not headed for a double-dip.
Eurogroup to unveil Greece finance plan in early July
The Euro-zone finance ministers postponed a final decision on extending €12.0 billion in emergency loans to Greece, and stated that a definite, new financing strategy would be outlined by early July 2011.
Widening Imbalances Challenge Policy Makers, says ECB’s Trichet
European Central Bank President, Jean-Claude Trichet, has indicated that global imbalances are beginning to widen again and this poses challenges for international policy makers.
Moody’s might downgrade Italy
Moody's Investors Service has placed Italy’s credit rating on review for a possible downgrade, citing the nation’s uncertain growth prospects.
Japanese trade deficit widened in May
Japan’s trade deficit stood at ¥853.7 billion in May, compared to a revised ¥464.8 billion deficit recorded in the previous month.

Economic Calendar

Note: PPPHigh           PPMedium           PLow

Corporate Calendar