Market Preview - 3 July 2012; Positive start for stock markets

UK Stocks: To open in the green
The FTSE 100 will open 11 to 14 points firmer.
Construction Purchasing Managers’ Index (PMI), Mortgage Approvals, M4 Money Supply, Consumer Credit, Net Lending Secured on Dwellings, BRC Shop Price Index and Halifax House Prices are the key economic indicators scheduled for release.
Polar Capital Technology Trust, Anite, St Modwen Properties, Real Good Food Company and Sweett Group are scheduled to announce their results.
GlaxoSmithKline has agreed to pay $3.0 billion as settlement charges over the alleged violation of US laws relating to marketing and development of pharmaceuticals.
The Australian Financial Review has reported that Rio Tinto plans to lower support and services costs by about 10.0 percent globally.

Asia: Trading firmer
Asian markets are trading in the green this morning amid expectations of further monetary easing by global central banks to stimulate growth.
In Japan, Sanken Electric has surged after a broker indicated that the company may match its annual profit guidance for the first time in a decade. Banks, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group have jumped after a broker upgraded its rating on both the stocks to “Buy” from “Out-perform”. Daiichi Sankyo has advanced following news that it has initiated a joint venture with GlaxoSmithKline. On the other hand, Kawasaki Kisen Kaisha has slumped after the company announced plans to raise about ¥28.6 billion through a new share sale. At 5 am GMT, the Nikkei 225 index has advanced 0.6 percent to trade at 9,058.5.
In South Korea, Hyundai Heavy Industries has jumped on news that it has received a KRW 1.34 trillion order to build ten container carriers in Greece. Himart has surged amid reports that MBK partners dropped its bid to acquire the company. In Hong Kong, China Resources Land and Sino Land have advanced following reports that new home prices in China rose for first time in 10 months in June. In China, China Vanke has risen amid reports that the government may refrain from introducing new measures to curb the housing market.

US Stocks: Futures trading higher
At 5 am GMT, S&P 500 futures are trading 2.5 points firmer.
Factory Orders, ISM New York Business Conditions Index, Total & Domestic Vehicle Sales are the key economic indicators scheduled for release.
No major corporate releases are scheduled.
Microsoft Corporation edged 0.9 percent lower in after hours trading session yesterday after it earlier warned that it would take a goodwill asset impairment charge of about $6.2 billion in the fourth quarter. Men’s Wearhouse slipped 0.7 percent after it announced that Neill Davis, its Chief Financial Officer, would step down. On the upside, BPZ Energy soared 22.4 percent following the announcement that Gordon Gray, its board member, has decided to resign from the board. TranSwitch Corporation climbed 2.8 percent after it appointed Richard J. Lynch as its new Chairman and unveiled a restructuring plan to save $8.0 million in employee-related costs and other areas. Amongst other gainers, Asset Acceptance Capital and Endeavour International surged 6.8 percent and 6.5 percent, respectively.
The S&P 500 index edged up 0.2 percent in the regular trading session yesterday as optimism over M&A deals announced across sectors offset data indicating an unexpected contraction in the manufacturing sector in June. Best Buy Company surged 5.9 percent following reports that its founder, Richard Schulze, is close to making a bid for the company. Micron Technology climbed 3.8 percent after it agreed to acquire Elpida Memory Inc for around $2.5 billion. Bristol Myers Squibb Company added 0.3 percent after it agreed to buy Amylin Pharmaceuticals for about $5.3 billion. Banking sector stocks, Morgan Stanley, JPMorgan Chase and Goldman Sachs advanced 2.4 percent, 1.5 percent and 1.3 percent, respectively, amid improved risk appetite amongst investors. Duke Energy Corporation gained 1.0 percent after South Carolina regulators approved the merger of the company with Progress Energy. On the downside, Dell dropped 1.0 percent. The company announced the acquisition of Quest Software for $2.4 billion.

European Stocks: Expected to open firmer
The DAX and the CAC are likely to open 17 to 23 points and 16 to 17 points in positive territory, respectively.
Eurozone’s Producer Price Index and Spanish Net Unemployment are the key economic indicators scheduled for release today.
Diamyd Medical AB is scheduled to announce its results today.
A Brazilian judge has ordered the local subsidiaries of Royal Dutch Shell and BASF SE to pay about $382.0 million into a compensation fund for a large number of ex-workers suing for damages in an alleged plant contamination case.
Airbus, the subsidiary of EADS SA, has unveiled plans to build their first factory in the US, in a move to acquire market share in the nation.
According to a senior labour union official of PSA Peugeot Citroen SA, the company might announce the reduction of about 10.0 percent of its French workforce to boost savings.
According to Bloomberg, Credit Suisse Group AG intends to sell its 7.0 percent stake in Aberdeen Asset Management for about £205.0 million.

Forex Overnight: USD weaker
The USD is trading lower against the majors early Tuesday as market speculation over further easing by the Federal Reserve strengthened after data released yesterday indicated an unexpected contraction in the manufacturing activity for June. Meanwhile, investors await the release of factory orders and ISM New York business conditions index slated later in the day. At 5 am GMT, the EUR is trading 0.2 percent higher against the USD at $1.2600 while the GBP is trading marginally firmer against the USD at $1.5698.
The AUD has climbed 0.2 percent against the USD after data indicated a rise in Australian building permits for May. Additionally, the Reserve Bank of Australia (RBA) has kept its interest rate on hold at 3.5 percent, in line with market expectations.

Macro Update
Fed won’t allow easy policy to spark inflation, indicates Williams
San Francisco Federal Reserve Bank (Fed) President, John Williams, has stated that the US Fed is prepared to tighten the ultra-easy monetary policy, when required, to control inflationary pressures.
RBA keeps key interest rate unchanged
The RBA has kept its key interest rate unchanged at 3.5 percent, in line with market expectations.
Non-manufacturing activity improves in China
China’s official non-manufacturing Purchasing Mangers’ Index (PMI) has advanced to a reading of 56.7 in June compared to a reading of 55.2 reported in the previous month.
Monetary base in Japan climbs
On a yearly basis, the monetary base in Japan has risen 5.9 percent in June compared to a 2.4 percent growth recorded in May.
Japan’s monthly wages slip
On an annual basis, the total average monthly cash earnings per employee in Japan has declined 0.8 percent in May, the first drop in four months and compared to a revised 0.2 percent increase reported in the previous month.
Australian building permits rise
On an annual basis, Australian new home building approvals have jumped 9.3 percent in May compared to a revised 23.0 percent drop recorded in April.
Aiding growth is the first priority, says Kim
Newly appointed President of the World Bank, Jim Yong Kim, has indicated that the bank is monitoring the current situation very carefully and is in a strong financial position to meet loan demand from the emerging markets in case of further deterioration in the global economy.

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