Market Preview - 22 February 2012

Forex Overnight: USD trading marginally lower
The USD is trading marginally lower against most of the majors, this morning, ahead of U.S. existing home sales data which is expected to show that sales rose to the highest level since May 2010. Additionally, markets await the German, French and Eurozone Purchasing Managers’ Index (PMI) data scheduled to be released later today. At 6 am, the EUR and the GBP have climbed marginally against the USD to trade at $1.3237 and $1.5791, respectively.
The JPY has weakened 0.4 percent each, against the USD and the EUR.
The AUD has gained 0.1 percent against the USD, after the Conference Board and Westpac Institute’s leading economic indices climbed in December.

UK Stocks: Expected to open flat
The FTSE 100 is likely to open almost unchanged.
Investors await the minutes of the Bank of England’s last monetary policy meeting.
Travis Perkins, Millennium & Copthorne Hotels, Hays, Barratt Developments, Filtrona, Galliford Try and Anglo Pacific Group are scheduled to report their results later today.
BHP Billiton’s coking coal miners in Australia have filed notices to extend strike action at three operations as a seven-day shutdown was scheduled to end today.
HSBC Holdings has indicated that it plans to issue shares to pay the cash element of bonuses for its U.K. bankers, in response to regulatory pressure to preserve capital base.
Reuters has reported that Rio Tinto Alcan, the subsidiary of Rio Tinto, has asked Japanese buyers to pay $132.0 per tonne premiums for April-June primary aluminium shipments.
The Financial Times has reported that Mitchells & Butlers has drawn up a shortlist of three potential candidates to be CEO of the company, as it seeks to bring an end to its year-long search.

Asia: Trading in the green
Asian markets are trading higher this morning.
In Japan, Japan Petroleum Exploration has gained value, after a broker upgraded its rating on the stock to “Out-Perform” from “Neutral”. NTT DoCoMo has risen, amid news that it has completed the expansion of its capacity to prevent service glitches. All Nippon Airways has climbed, after a broker hiked its target price on the stock. Carmakers, Toyota Motor, Nissan Motor and Mitsubishi Motors are trading in the green, as the Yen depreciated against the Dollar. However, Dentsu has edged lower, despite raising its full year net income forecast. At 6 am, the Nikkei 225 index has climbed 1.0 percent to trade at 9,555.5.
In Hong Kong, Alibaba.com has rallied, after its parent, Alibaba Group, confirmed that it plans to take Alibaba.com private. On the other hand, Lenovo Group has dropped, after its U.S. peer, Dell, reported lower-than-expected fourth quarter earnings. In South Korea, Hyundai Mobis has risen, following news that the long-delayed free trade agreement with the U.S. that is expected to benefit local parts makers will go into effect on 15 March 2012. In China, China Vanke and Poly Real Estate Group have recorded gains, amid news that Shanghai city has relaxed home purchase restrictions.

US Stocks: Futures trading firmer
At 6 am, S&P 500 futures are trading 1.6 points in the green.
Existing Home Sales and MBA Mortgage Applications are the key economic indicators scheduled for release today.
Hewlett Packard, Express Scripts, Analog Devices, Fluor Corporation, Dollar Tree and Flowserve Corporation are scheduled to announce their results today.
Dell plunged 5.1 percent, in the after hours trading session yesterday, after its fourth quarter earnings trailed market expectation and issued a bleak revenue forecast for the current quarter. Yingli Green slumped 8.5 percent, after it lowered its guidance for fourth quarter shipments and gross margin. Cheesecake Factory retreated 5.0 percent, after it issued a cautious view for new restaurant growth. Nabors Industries dropped 2.7 percent, despite posting better-than-expected adjusted earnings for the fourth quarter. On the other hand, Intuit jumped 3.4 percent, following upbeat second quarter profit. Brocade Communications surged 6.0 percent, after its adjusted first quarter earnings surpassed market consensus.
The S&P 500 index edged 0.1 percent higher, in the regular trading session yesterday, after European finance ministers approved the Greek bailout package. Wynn Resorts jumped 6.0 percent, after the company forcibly bought out the stake of its largest shareholder, Kazuo Okada, at a 31.0 percent discount. Chevron and Exxon Mobil Corporation gained 1.6 percent and 1.1 percent, respectively, tracking the rise in crude oil prices. Kraft Foods advanced 1.5 percent, after it forecast earnings growth of at least 9 percent in 2012 even as it trims its portfolio of North American brands. Banking sector stocks, Citigroup, Bank of America and Morgan Stanley advanced 1.3 percent, 1.1 percent and 0.5 percent, respectively, as risk appetite among investors improved. Macy’s rose 1.2 percent, after its fourth quarter profit exceeded market expectation. On the other hand, Wal-Mart Stores fell 3.9 percent, following lower-than-expected fourth quarter profit excluding items.

European Stocks: Likely to open weak
The DAX and CAC are expected to open 14 to 18 points and 7 to 9 points in negative territory, respectively.
German Manufacturing and Services PMI, French Consumer Price Index & Services PMI, Eurozone Manufacturing and Services PMI & Industrial orders are the key economic indicators scheduled for release today.
Daimler AG, France Telecom SA, Schneider Electric SA, CNP Assurances SA and Accor SA are scheduled to announce their results today.
The Wall Street Journal has reported that Anheuser-Busch InBev NV is weighing a potential acquisition of Czech brewer, StarBev, for about $3.0 billion.
UniCredit SpA has won a ruling dismissing alleged racketeering and other claims filed by the trustee liquidating Bernard Madoff’s firm.
Bloomberg has reported that E.ON AG is proceeding with the sale of energy assets in Germany valued at about €4.5 billion.
Financial Times Deutschland has reported that Commerzbank AG’s Deutsche Schiffsbank unit plans to limit business relationships to customers who are considered strategically important.
According to the Wall Street Journal, Alstom SA is considering the sale of offshore Yuan-denominated bonds.

Macro Update
China HSBC flash manufacturing PMI rises
The HSBC flash PMI for manufacturing activity in China has advanced to a four-month high reading of 49.7 in February, compared to a reading of 48.8 recorded in January.
Australia’s leading economic index climbs
On a monthly basis, the Conference Board’s Leading Economic Index for Australia has risen 0.2 percent in December, compared to a 0.3 percent decline recorded in November. Additionally, the Westpac-Melbourne Institute’s Leading Economic Index for Australia has climbed 0.5 percent M-o-M in December to 283.4 points.
Wages in Australia increase
On a seasonally adjusted sequential basis, the wage price index in Australia has increased 1.0 percent in the fourth quarter of 2011, following a 0.7 percent rise recorded in the third quarter.

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