Market Preview - 5 December 2011

Forex Overnight: Euro trading stronger
The Euro is trading higher against the USD, after Italy announced €30.0 billion in austerity measures, ahead of a European leaders’ summit, later this week. Additionally, the German Chancellor, Angela Merkel, is scheduled to meet the French President, Nicolas Sarkozy, today. At 6am, the EUR has gained 0.1 percent against the USD and GBP each, to trade at $1.3403 and £0.8595, respectively.
The JPY is trading marginally higher against the USD, while it is trading 0.1 percent lower against the EUR.
The AUD is trading 0.1 percent lower against the USD, amid expectations that the Reserve Bank of Australia will cut interest rates in its policy meeting tomorrow.

UK Stocks: Expected to open in the green
The FTSE 100 is likely to open 3 to 9 points firmer.
Services Purchasing Managers' Index (PMI) and Changes in Official Reserves are the key economic indicators scheduled for release today.
TUI Travel, Aberdeen Asset Management, Sirius Real Estate, Treatt and Probability are scheduled to announce their results today.
Qatar has inked a deal with Royal Dutch Shell to develop a $6.4 billion petrochemicals complex in the Ras Laffan industrial city in the Gulf Arab state.
Cynthia Carroll, the CEO of Anglo American, has stated that South Africa has the potential to be a leader in fuel cells with government assistance, and that the focus should be to promote strong, viable local manufacturing industry that supports everyday utility.
Barclays has planned to pay an estimated £5.0 billion in salaries, bonuses and perks to its investment bankers, this year, despite calls for restraint from the Bank of England Governor, Mervyn King.

Asia: Trading higher
Asian markets are trading mostly higher this morning, amid optimism that progress would be achieved this week in easing the Eurozone debt crisis, after Italy outlined a €30 billion three-year austerity plan over the weekend, which the Italian Prime Minister, Mario Monti, will present to both houses of Parliament today.
In Japan, financial sector stocks, Sumitomo Mitsui Financial Group, Nomura Holdings and Mitsubishi UFJ Financial Group have surged, tracking gains in their U.S. peers on Friday. Exporters have added value, with Elpida Memory, Toyota Motor Corporation, Nikon Corporation and Ricoh pacing gains. Inpex Corporation and Japan Petroleum Exploration have advanced, following a rise in crude oil prices. Fast Retailing has soared, after it reported a 1 percent drop in November same-store sales, compared to a 4 percent drop in October. At 6 am, the Nikkei 225 index has advanced 0.7 percent to trade at 8,701.0.
In South Korea, Samsung Electronics has advanced, as Apple Inc. lost a bid to block sales of its Galaxy phones and tablet computers in the U.S. In Hong Kong, Li & Fung Limited has jumped, tracking optimism towards exporters. In China, China Vanke and Financial Street Holdings have declined, after the Chinese central bank indicated that property investment growth has eased from a “high level” and that developers are facing tighter credit conditions.

US Stocks: Futures trading firmer
At 6 am, S&P 500 futures are trading 9.7 points higher.
Key economic indicators scheduled for release today include ISM Non-Manufacturing Index and Factory Orders.
Dollar General Corp, Ingles Markets Inc and Pep Boys - Manny Moe & Jack are scheduled to announce their results later today.
In after hours trade on Friday, Lockheed Martin climbed 2.2 percent. Shutterfly added 5.4 percent to its regular session gains, aided by positive analyst reports. IntraLinks Holdings jumped 2.7 percent, after Discovery Group LLC reported a 5.8 percent stake in the company. On the other hand, Groupon lost 2.3 percent, amid reports that it is being investigated by the British competition regulator.
The S&P 500 index dropped a marginal 0.3 points in the regular trading session on Friday, amid investor caution, ahead of a key European Union summit this week. Healthcare sector stocks, Tenet Healthcare Corporation and Boston Scientific Corporation slumped 10.7 percent and 6.8 percent, respectively, following reports that insurers who handle Medicare payments in 11 states will perform audits on hospital stays related to heart and orthopaedic procedures to determine the medical necessity of the stay. Big Lots dropped 8.7 percent, after it reported lower-than-estimated third quarter earnings. H&R Block slid 6.4 percent, following higher-than-expected loss for the second quarter. Western Digital Corporation soared 7.5 percent, after it raised its quarterly revenue outlook. Financial sector stocks, Morgan Stanley, JPMorgan Chase, Citigroup, and Goldman Sachs rallied 7.0 percent, 6.1 percent, 4.4 percent and 3.0 percent, respectively, amid optimism of a solution to the Eurozone crisis.

European Stocks: Likely to open firmer
The DAX and CAC are expected to open 13 to 20 points and 10 to 11 points in positive territory, respectively.
German and French Services PMI, and Eurozone’s composite PMI, Sentix Investor Confidence Index & Retail sales are the key economic indicators scheduled for release today.
STS Group SA is scheduled to announce its results later today.
SAP AG has announced that its U.S. subsidiary has entered into a definitive merger agreement with the U.S. cloud-based software solutions provider, SuccessFactors, Inc.
RWE has announced plans to reduce up to 8,000 of its 72,000 jobs over the next few years, half of which will result from divestments.
According to Automotive News Europe, Daimler AG has announced plans to increase the output of its Mercedes Benz plant in Tuscaloosa, Alabama.
Repsol YPF SA has raised its oil output in Ecuador to 45,000 barrels per day, on the back of two new wells in the Amazon region.
The Financial Times Deutschland has reported that ThyssenKrupp AG is set to sign a deal to divest its shipbuilding unit, Blohm & Voss GmbH, to British investor, Star Capital Partners Limited, within 14 days.

Macro Update
Italy's government approves austerity plan
The Italian government has approved a three year austerity plan worth €30.0 billion, including spending cuts, tax hikes and pension reforms, in a move to revive the Italian economy. The package also includes measures to fight tax evasion and spur growth & competition.
Italy economy to shrink, warns Vittorio Grilli
Italian Deputy Economy Minister, Vittorio Grilli, has cautioned that the nation’s economy is expected to contract by 0.4 to 0.5 percent in 2012, and remain flat in 2013.
Sarkozy and Merkel to chalk out Euro crisis plan
Today, the French President, Nicolas Sarkozy and the German Chancellor, Angela Merkel, are scheduled to unveil details of a plan to save the Euro, and propose European Union treaty changes, in a move to stave off the region’s debt crisis.
China’s private sector activity contracts
The Markit/HSBC composite output index, which measured activity in both the manufacturing and services sectors in China, fell to a reading of 48.9 in November, compared to a reading of 52.6 posted in the previous month.
Australian consumer prices ease, shows survey
TD Securities and Melbourne Institute survey has indicated that, on a monthly basis, the consumer price index in Australia declined 0.1 percent in November, compared to a 0.1 percent rise recorded in October.

Economic Calendar

Country	GMT	Economic Indicator	Relevance	Consensus/*Actual	Previous	Frequency
UK	0:01	Lloyds Employment Confidence (Nov)	P	-75.00*	-72.00	Monthly
France	8:50	Purchasing Manager Index Services (Nov F)	P	49.30	49.30	Monthly
Germany	8:55	Purchasing Manager Index Services (Nov)	PP	51.40	51.40	Monthly
Eurozone	9:00	Purchasing Manager Index Composite (Nov)	PP	47.20	47.20	Monthly
Eurozone	9:00	Purchasing Manager Index Services (Nov)	PP	47.80	47.80	Monthly
Eurozone	9:30	Sentix Investor Confidence (Dec)	PP	₋	-21.20	Monthly
UK	9:30	Purchasing Manager Index Services (Nov)	PP	50.50	51.30	Monthly
UK	9:30	Official Reserves (Changes) (Nov)	P	₋	$1387.00 mn	Monthly
Eurozone	10:00	Retail Sales (MoM) (Oct)	PPP	₋	-0.70%	Monthly
Eurozone	10:00	Retail Sales (YoY) (Oct)	PPP	₋	-1.50%	Monthly
US	15:00	ISM Non-Manufacturing Composite (Nov)	PP	53.50	52.90	Monthly
US	15:00	Factory Orders (Oct)	PP	0.00%	0.30%	Monthly
US	17:00	Fed's Evans Speaks in Muncie, Indiana	P	₋	₋	-
Japan	₋	Tokyo Avg Office Vacancies (%) (Nov)	P	₋	8.78%	Monthly

Note:PPPHighPPMediumPLow


Corporate Calendar

Country	Company Name	Index	Announcement
UK	Aberdeen Asset Management Plc	FTSE All Share	Prelim
UK	TUI Travel Plc	FTSE All Share	Prelim