Market Preview - 31 January 2012

Forex Overnight: EUR trading firmer
The EUR has advanced against the major currencies, this morning, after Lucas Papademos, the Greek Prime Minister, stated that progress has been made in debt-swap talks with private sector creditors. Traders are keeping an eye on the U.S. consumer confidence data scheduled for release later today, which is expected to indicate an improvement in January. At 6 am, the EUR has climbed 0.4 percent and 0.2 percent against the USD and the GBP, to trade at $1.3193 and £0.8383, respectively.
The JPY has risen 0.2 percent against the USD, amid market speculation that the Japanese government may take measures to limit the Yen’s advance.
The AUD has edged 0.3 percent higher against the USD, after data indicated that Australian business confidence improved in December.

UK Stocks: Likely to open higher
The FTSE 100 index is expected to open 20 to 24 points in positive territory.
M4 Money Supply, Mortgage Approvals and Net Consumer Credit are the key economic indicators scheduled for release later today.
Key corporate results scheduled for release today include British Sky Broadcasting Group, ARM Holdings and Ocado Group.
British Prime Minister, David Cameron, hasurged Royal Bank of Scotland to show restraint on its executive bonus payments in the future.
According to the Financial Times, Royal Bank of Scotland had rejected a higher offer from the China Development Bank to acquire its RBS Aviation Capital unit, amid concerns over a potential failure of the deal.
Aviva has indicated that it plans to eliminate about 160 jobs at its asset management unit.
The Financial Times has reported that Tesco may abort its plan to brand all its products with a carbon footprint label citing complexities in the communication.

Asia: Trading mixed
Asian markets are trading mixed this morning.
In Japan, industrial sector stocks, Fanuc, Hitachi Construction Machinery and Fuji Heavy Industries have advanced, following upbeat industrial production data for December. Sumitomo Mitsui Financial Group has gained, after it indicated that it will meet its full year profit forecast, and announced a share repurchase program. Advantest has added value, after a broker upgraded its rating on the stock to “Neutral” from “Under-Perform”. On the downside, Fujifilm Holdings has slumped, after it reduced its full year profit estimate by almost half. At 6 am, the Nikkei 225 index has lost 0.1 percent to trade at 8,785.5.
In South Korea, LG Innotek has surged, after a broker upgraded its rating on the stock to “Buy” from “Hold”. A $560.0 million contract to supply tankers to Kuwait Oil Tanker Co. has led Daewoo Shipbuilding & Marine Engineering  higher. In Hong Kong, China Mobile and China Telecom have gained, after a broker indicated that Apple may include both the companies as iPhone distributors in the next year. In China, Aluminum Corporation of China has declined, after it stated that it expects its 2011 net profit to fall more than 50.0 percent.

US Stocks: Futures trading marginally higher
At 6 am, S&P 500 futures are trading 0.6 points firmer.
S&P/Case-Shiller Home Price Index, Chicago Purchasing Managers’ Index, Consumer Confidence Index and Employment Cost Index are the key economic indicators scheduled for release today.
Exxon Mobil, Pfizer, Amazon.com, United Parcel Service, Danaher, United States Steel, Archer-Daniels-Midland, Broadcom and McGraw-Hill Companies are scheduled to announce their results today.
RadioShack plunged 19.8 percent in the after hours trading session yesterday, after it issued a lower-than-expected fourth quarter earnings forecast. Align Technology declined 6.3 percent, following cautious first quarter adjusted profit guidance. Among other laggards, Plum Creek Timber, Best Buy Company and EOG Resources lost 2.9 percent, 2.2 percent and 1.7 percent, respectively. On the contrary, McKesson added 3.6 percent, on the back of upbeat third quarter results. Hologic advanced 7.1 percent, following better-than-expected first quarter results and after it boosted its full year earnings forecast.
The S&P 500 fell 0.2 percent, in the regular trading session yesterday, amid persistent concerns over Greek debt negotiations. Gannett slumped 6.9 percent, after it reported a substantial decline in its fourth quarter profit. Staples fell 4.9 percent, after a broker downgraded its rating on the stock to “Sell” from “Neutral”. United States Steel lost 3.8 percent, after it agreed to sell its Serbian unit to the local government for a “nominal” price, and added that it expects a loss on the sale. Bank of America declined 3.0 percent, after a broker lowered its stance on the stock to “Neutral”, while JPMorgan Chase edged 0.5 percent lower, after being removed from the “Conviction Buy” list of the same broker. On the other hand, Nabors Industries gained 3.5 percent, amid market speculation that the company might be a takeover target after the departure of its CEO. Technology sector stocks, Microsoft, Apple and Accenture added 1.3 percent, 1.3 percent and 1.1 percent, respectively.

European Stocks: Expected to open stronger
The DAX and CAC are likely to open 27 to 39 points and 15 to 22 points in the green, respectively.
Key economic indicators scheduled for release today include German Retail Sales and Unemployment Rate, Eurozone Unemployment Rate and Swiss UBS Consumption Indicator.
Enel SpA and Banco Santander SA are the key corporate results scheduled for release today.
European Aeronautic Defence and Space unit, Airbus, has indicated that it is planning the enhancement of its A330 passenger jet.
According to Bloomberg, the union representing ThyssenKrupp AG workers is “very far” from an agreement with Outokumpu Oyj over a deal to acquire the former’s Inoxum stainless steel unit.
Martin Blessing, the CEO of Commerzbank AG, has indicated that it had to renege on promises to pay €52.0 million in bonuses to bankers in 2008, amid a worsening outlook for his bank and the overall economy.
Fiat SpA has indicated that all of its five plants in Italy have resumed operations, after a truckers' strike last week.

Macro Update
Europe signs stricter fiscal pact
25 out of 27 European Union states agreed to a pact aimed at a stricter budget discipline, strengthening accountability and keeping a closer eye on member nations’ efforts to tackle overspending and resolve the region’s debt crisis.
UK consumer confidence improves
GfK NOP reported that its consumer confidence index in the U.K. rose to a reading of -29.0 in January, the highest since June 2011, following a reading of -33.0 recorded in the previous month.
Japanese industrial output climbs
On a seasonally adjusted monthly basis, industrial production in Japan grew 4.0 percent in December, compared to a 2.6 percent decline posted in the previous month.
Household spending in Japan rises
On an annual basis, the average monthly household spending in Japan advanced 0.5 percent in December, following a 3.2 percent contraction posted in November.
Japanese unemployment rate rises
On a seasonally adjusted basis, the unemployment rate in Japan climbed to 4.6 percent in December, compared to a 4.5 percent rate recorded in the previous month.
Australian business confidence improves
National Australia Bank’s (NAB) business confidence index in Australia rose to a reading of 3.0 in December, compared to a reading of 2.0 recorded in November.

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