Market Preview - 24 September 2012; Eyes on German Ifo confidence

Forex Overnight: EUR trading lower
The EUR has weakened against the major currencies this morning ahead of the German Ifo business confidence index for September, scheduled for release later today, which is expected to stay near the lowest level in more than two years. At 5 am GMT, the EUR has declined 0.3 percent and 0.2 percent versus the USD and the GBP to trade at USD 1.2948 and GBP 0.7983, respectively.

The JPY has strengthened 0.4 percent and 0.1 percent against the EUR and the USD, respectively. The minutes of the Bank of Japan’s (BoJ) August monetary policy meeting have revealed that the country’s economy has started to gain momentum again and that the central bank will implement monetary easing seamlessly.

The AUD has declined 0.3 percent versus the USD amid lower risk appetite amongst investors.

UK Stocks: Likely to open in negative territory
The FTSE 100 is expected to open 50 to 51 points in the red. Nationwide Housing Prices is the key economic indicator scheduled for release today.

Petra Diamonds, A.G.Barr, RGI International, Personal Group Holdings, EKF Diagnostics Holdings, DDD Group, Mam Funds and Finsbury Food Group are scheduled to report their results today.

According to the Sunday Times, BP plans to appoint a prominent Russian to its board of directors as part of a new commercial alliance with Moscow. The Sunday Times has reported that Centrica and Scottish & Southern Energy are setting up separate bids for Ireland's Bord Gais Energy. According to The Sunday Telegraph, Eurasian Natural Resources Corporation has cancelled a potential plan to split its African assets from the rest of the group.

Asia: Trading mostly weak
Asian markets are trading mostly lower this morning. In Japan, Canon, Fanuc and Komatsu are trading lower amid a persistent territorial dispute between Japan and China. Sumitomo Bakelite Company has declined after it lowered its first half year net income outlook. Exporters to Europe, Brother Industries and Makita Corporation are trading under pressure as the Yen strengthened against the Euro. Automobile sector stocks, Toyota Motor, Nissan Motor and Honda Motor have lost value. At 5 am GMT, the Nikkei 225 has dropped 0.5 percent to trade at 9,063.5.

In Hong Kong, Aluminum Corporation of China, Jiangxi Copper and Zijin Mining Group have lost value. Foxconn International Holdings is trading under pressure amid reports of a disturbance at one of the company’s plant in northern China. In China, Anhui Conch Cement and Gansu Qilianshan Cement Group have advanced following positive broker comments. Metallurgical Corporation of China has climbed following purchase of shares by the company’s executives. In South Korea, financial sector stocks, Hyundai Securities and Hana Financial Group have lost value. Samsung Electronics and LG Electronics have also declined.

US Stocks: Futures trading in the red
At 5 am GMT, S&P 500 futures are trading 1.5 points in negative territory. Chicago Federal Reserve (Fed) National Activity Index and Dallas Fed Manufacturing Business Index are the major economic indicators scheduled for release today.

Paychex, Red Hat, Lennar, Ennis and pSivida are scheduled to announce their results today.

Discover Financial Services gained 0.4 percent in the after hours trading session on Friday following an agreement with the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau to settle a probe of its sales of credit protection products. Amongst the other major gainers, Vicon Industries, China XD Plastics and MPG Office Trust jumped 7.5 percent, 6.3 percent and 4.6 percent, respectively. On the downside, Bona Film Group ADS, JinkoSolar Holding ADS, Sonus Networks and BLYTH were amongst the major laggards, losing 3.9 percent, 3.8 percent, 3.5 percent and 3.3 percent, respectively.

On Friday, the S&P 500 index ended almost flat in the regular trading session. Darden Restaurants surged 4.6 percent on the back of upbeat first quarter profit. Expedia rallied 4.0 percent after a broker upgraded its rating on the stock to “Buy” from “Hold”. Apple gained 0.2 percent after a broker raised its price forecast on the stock. Telecom sector stocks, Sprint Nextel and MetroPCS Communications added 3.9 percent each. On the flip side, Goodyear Tire & Rubber plunged 4.9 percent following a broker downgrade on the stock to “Hold” from “Buy”. Genworth Financial lost 2.9 percent after it indicated that protecting the company’s investment-grade status at Moody’s Investors Service might be more harmful than a downgrade to junk status. First Solar and Abercrombie & Fitch featured amongst the other major laggards, losing 6.1 percent and 4.7 percent, respectively.

European Stocks: Expected to open in the red
The DAX and the CAC are likely to open 28 to 29 points and 22 to 23 points lower, respectively. German Import Price Index, IFO - Business Climate, Current Assessment & Expectations Indices and Italian Trade Balance are the major economic indicators scheduled for release today.

Aryzta AG and Egide SA are scheduled to report their results later today.

Siemens AG has denied that it had sold any nuclear equipment to Iran, after a prominent Iranian lawmaker accused the company of selling the country nuclear gear that was planted with explosives. According to Reuters, Daimler AG is expected to extend the contract of its CEO, Dieter Zetsche, by three years to 2016. France Telecom SA's Chairman and CEO, Stephane Richard, has reiterated that the company forecasts an operating cash flow of EUR 8.0 billion in 2012. Der Spiegel has reported that European Aeronautic Defence & Space has offered Daimler AG a convertible bond in exchange for part of its holding in the former. According to a report in Swiss newspaper, Der Sonntag, Julius Baer Group plans to reduce up to 880 jobs at Merrill Lynch’s overseas wealth management unit.

Macro Update
Greece faces budget deficit of around EUR 20.0 billion to satisfy Troika, indicates report
German magazine, Der Spiegel, citing preliminary findings by the Troika, has indicated that Greece faces a budget shortfall of around EUR 20.0 billion to satisfy international conditions for emergency aid, almost double the Troika’s previous estimate.

Further interest rate cut unlikely, says ECB's Coeure
The European Central Bank Executive Board member, Benoit Coeure, has opined that the European Central Bank (ECB) is unlikely to lower its benchmark interest rate further, citing the high inflation rate and an improvement in the Eurozone’s economic outlook.

Japan's economic activity to resume, indicates BoJ minutes
The minutes of BoJ’s August monetary policy meeting have indicated that the nation’s economic activity has started to pick up moderately on improved domestic demand. However, members viewed domestic deflation and uncertain global economic conditions as key risks to the nation’s economic outlook.

Australian budget deficit narrows
The budget deficit in Australia has narrowed to AUD 43.7 billion in the twelve months to 30 June 2012 compared to the 44.4 billion deficit projected earlier.

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