Market Preview - 21 August 2012; UK public sector borrowing eyed

Forex Overnight: EUR trading firmer
The EUR is trading higher against the USD this morning ahead of the Luxembourg Prime Minister, Jean-Claude Juncker’s visit to Greece tomorrow to discuss the nation’s request for an extension to its fiscal adjustment programme. Moreover, investor sentiment was boosted as Spanish 10-year bond yields declined yesterday, to the least since July 2, 2012. At 5 am GMT, the EUR has advanced 0.1 percent versus the USD to trade at $1.2353 while it is trading flat versus the GBP at £0.7857.
The AUD has advanced 0.3 percent versus the USD after the minutes of the Reserve Bank of Australia’s (RBA) latest policy meeting showed that its policy makers see economic growth in the country despite a “fragile” global outlook.

UK Stocks: Expected to open higher
The FTSE 100 is likely to open 8 to 15 points in the green.
Public Sector Net Borrowing and CBI Trends - Selling Prices & Total Orders are the key economic indicators scheduled for release today.
Glencore International, John Wood Group, Persimmon, Afren, Gem Diamonds, Severfield-Rowen, CPP Group and Johnston Press are scheduled to report their results today. Royal Dutch Shell has stated that it will pay $450.0 million and swap its stakes in two fields off the Australian coast with Chevron Corporation in a liquefied natural gas project worth more than $30.0 billion. The Financial Times has reported that Royal Dutch Shell is in talks with the US government in an effort to boost its planned summer drilling programme in the Arctic by starting work before securing the final approvals.
Indian newspaper, Business Standard has reported that Reliance Industries Limited and BP India, the Indian subsidiary of BP, are in talks with power producers in Andhra Pradesh, India, to supply long-term liquefied natural gas.

Asia: Trading mostly in the green
Asian markets are trading mostly in positive territory this morning.
In Japan, Fujitsu has climbed after a broker upgraded its ratings on the stock to “Buy” from “Neutral”. Nintendo Company is trading higher after it launched its 3DS XL portable game system in the US. Financial sector stocks, Nomura Holdings and Daiwa Securities Group are trading higher. On the contrary, Mitsui O.S. K. Lines has dropped following a broker downgrade to “Neutral” from “Buy”. Additionally, Hitachi Construction Machinery Company and Komatsu have retreated after a broker downgraded its ratings on the stocks to “Neutral” from “Out-perform”. At 5 am GMT, the Nikkei 225 index is trading flat at 9,172.5.
In Hong Kong, energy sector stocks, China Coal Energy Company and Cnooc are trading under pressure. On the other hand, Tingyi Holding Corporation has climbed following a broker upgrade to “Out-perform” from “Neutral”.
In South Korea, SK Hynix is trading higher amid speculation that that DRAM prices could stabilise and recover in the second half of 2012.
In China, Chongqing Ganjiu Company and Chongqing Road & Bridge Company have surged following reports that Chongqing municipality plans to boost industrial investment in the region. Kweichow Moutai Company and Wuliangye Yibin Company have advanced amid reports that China might issue new policies to boost consumption in 2012.

US Stocks: Futures trading higher
At 5 am GMT, S&P 500 futures are trading 0.9 points in the green. No major economic indicators scheduled for release today.
Medtronic, Dell, Intuit, Analog Devices, Best Buy, Williams-Sonoma, DSW, Aspen Technology, Tech Data, Raven Industries, Globe Specialty Metals and Barnes & Noble are scheduled to announce their results today.
Urban Outfitters rallied 17.3 percent in the after hours trading session on Monday after it reported better-than-expected second quarter results. Upbeat third quarter profit and buoyant fourth quarter guidance led Nordson to climb 13.8 percent. Fabrinet jumped 7.0 percent after it reported better-than-expected earnings per share for the fourth quarter. DreamWorks Animation gained 2.6 percent after it signed an agreement with News Corporation’s Twentieth Century Fox for the distribution of its animated movies. On the contrary, ImmunoCellular Therapeutics tumbled 13.1 percent following the resignation of its President and CEO, Manish Singh. VirnetX Holding declined 4.8 percent after the International Trade Commission terminated an investigation into the company’s allegations that Apple was engaged in unfair-trade practices.
Yesterday, the S&P 500 index ended flat in the regular trading session. Coventry Health Care rallied 20.3 percent after Aetna indicated plans to acquire the company for $5.7 billion in cash and stock. Kinder Morgan advanced 1.9 percent after it indicated that it has reached an agreement to sell its stake in the energy pipeline and infrastructure assets in the Rocky Mountains to Tallgrass Energy Partners for a cash consideration of $1.8 billion. On the other hand, Best Buy Company slumped 10.4 percent after it announced the appointment of its new CEO and stated that its founder, Richard Schulze, has declined a buyout offer. Lowe's Companies declined 5.8 percent after its second quarter earnings declined and it slashed its full year earnings outlook.

European Stocks: Likely to open in positive territory
The DAX and the CAC are expected to open 5 to 9 points and 6 to 8 points firmer, respectively.
Swiss Money Supply and Real Estate Index Family Homes are the key economic indicators scheduled for release today.
CA Immobilien Anlagen AG, Sixt AG, Schuler AG, Stroeer Out of Home Media AG, Aspo Oyj, Beko Holding AG and Wienerberger AG are scheduled to announce their results today.
Volkswagen Group of America, Volkswagen AG’s US unit has opened its $27.0 million new product development and emissions test laboratory in California.
A union official has stated that workers at Areva SA's Somair uranium mine in Niger started an open-ended strike over labour conditions yesterday.
Alexander Friedman, the Chief Investment Officer of UBS AG is considering the development of a new business model to attract wealthy clients.

Macro Update
Australian growth near trend level, indicates RBA minutes
The minutes of the RBA’s latest monetary policy meeting indicated that the domestic economy expanded near its trend level in the June quarter. The banks's policy makers further indicated that they are comfortable with the easing cycle conducted so far and it will take time for the impact of rate cuts to become apparent.
Eurozone crisis only half done, indicates Moody’s
Moody's Investors Service has stated that the crisis in the Eurozone's weakest countries is only half way finished as Spain, Portugal and Italy could emerge out of their current crisis by 2013, while Greece and Ireland would completely be able to shore up their fragile economies by 2016.
US housing market is ticking back up, says Obama
Barack Obama, the US President, has stated that the nation's housing market is beginning to show signs of improvement though it is still not where it needs to be.
Canadian banks to face rising headwinds, warns Fitch
Fitch Ratings has cautioned that Canadian banks would face increased pressure as revenues from key businesses such as consumer lending and capital markets would begin to decline over the coming quarters.

Economic Calendar

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