Market Preview - 6 July 2012; Non-farm payrolls to set the tone

UK Stocks: Expected to open weak
The FTSE 100 is likely to open 17 to 18 points lower.
Producer Price Index is the key economic indicator scheduled for release.
Sandvine Corporation is scheduled to announce its results.
According to Bloomberg, Deutsche Telekom AG’s T-Systems unit won an extension of a deal worth €1.0 billion to manage Royal Dutch Shell’s data center infrastructure.
Petroleum Intelligence Weekly has reported that BP has been excluded from the companies allowed to bid for Abu Dhabi National Oil Company’s onshore oil fields.
Workers at Rio Tinto’s Alcan plant in Alma, Quebec have voted to end a labour dispute which had been running since the beginning of the year.

Asia: Trading in the red
Asian markets are trading in negative territory after easing actions in Europe and China intensified concerns over the global economic outlook.
In Japan, GS Yuasa Corporation has declined after a broker reduced its rating on the stock to “Under-weight” from “Equal-weight”. JX Holdings and Showa Shell Sekiyu K.K. have dropped tracking weak crude oil prices. Export sector stocks, Canon, Fujitsu and Mazda Motor Corporation are trading in the red. Nomura Holdings and Daiwa Securities Group are trading lower amid reports that Japanese regulators were probing into possible links to insider trading at major brokerages. On the upside, Tact Home has climbed after it raised its full year dividend to ¥4,000 per share from ¥3,700. At 5 am GMT, the Nikkei 225 index is trading 0.9 percent lower at 8,998.5.
In Hong Kong, banking sector stocks, Bank of Communications Company and China Construction Bank Corporation are trading under pressure. On the other hand, Foxconn International Holdings has climbed amid reports that it is developing smartphones for Amazon.com Inc. In South Korea, Samsung Electronics Company has declined even as it forecasted record high operating profit for the second quarter. In China, Yanzhou Coal and Taiyuan Coal Gasification Company have declined. PetroChina is trading lower following reports that China might lower fuel prices next week.

US Stocks: Futures trading lower
At 5 am GMT, S&P 500 futures are trading 2.7 points weaker.
Change in Non-farm Payrolls, Unemployment Rate and Average Weekly Earnings are the key economic indicators scheduled for release.
No major corporate releases are scheduled.
Xyratex jumped 7.5 percent in after hours trading session on Thursday after the company swung to a profit in the second quarter and provided buoyant earnings forecast for the third quarter. VanceInfo Technologies, Thompson Creek Metals and Denbury Resources featured amongst other major gainers, climbing 6.8 percent, 5.6 percent and 4.4 percent, respectively. Informatica plummeted 26.0 percent after it lowered its revenue and earnings guidance for the second quarter. Seagate Technology retreated 3.0 percent following downbeat sales outlook for the fourth quarter. Amongst other major laggards, Alexza Pharmaceuticals, ValueVision Media, Amtech Systems and iSoftStone Holdings tumbled 8.9 percent, 7.4 percent, 7.3 percent and 5.9 percent, respectively.
Yesterday, the S&P 500 index eased 0.5 percent in the regular trading session after data showed that the ISM services sector activity declined more-than-expected in June. Banking sector stocks, JPMorgan Chase, Morgan Stanley, Bank of America and Citigroup declined 4.2 percent, 4.0 percent, 3.0 percent and 2.9 percent, respectively, amid concerns over a probe into possible manipulation of the LIBOR rates. Advanced Micro Devices retreated 2.5 percent after a broker downgraded its rating on the stock to “Neutral” from “Buy”. Anadarko Petroleum Corporation, Marathon Petroleum Corporation and Schlumberger slipped 2.8 percent, 2.6 percent and 1.8 percent, respectively, following lower crude oil prices. On the upside, Netflix rallied 13.4 percent following positive broker comments. Better-than-expected same-store sales for June led Ross Stores to soar 7.0 percent.

European Stocks: Likely to open in negative territory
The DAX and CAC are expected to open 30 to 33 points and 24 to 25 points lower, respectively.
German Industrial Production, French Budget & Trade Balance, Swiss Consumer Price Index & Foreign Currency Reserves, Portuguese Industrial Sales and Spanish Industrial Output are the key economic indicators scheduled for release. Additionally, market awaits the European Commission’s quarterly report on the Eurozone later.
Fabege AB, Wihlborgs Fastigheter AB and STS Group SA are scheduled to report their results.
The National Institute for Health and Clinical Excellence has rejected Roche Holding AG’s cancer drug, Avastin, as a first-line treatment for advanced breast cancer.
According to Reuters, Carlyle Group is in the lead to acquire TCW Group, the asset management unit of Societe Generale SA.
Areva SA has stated that its consortium with Siemens AG has won a partial arbitration ruling against Finnish utility, TVO, in a dispute over delays and cost overruns at the Olkiluoto 3 reactor.

Forex Overnight: EUR trading lower
The EUR is under pressure against the major currencies Friday after Thursday's central bank actions were viewed, on balance, as favouring risk-off.

On the day, data are expected to showGerman & Spanish industrial production declined in May, US non-farm payrolls is expected to show an increase in the empoyed in June.

At 5 am GMT, the EUR has declined 0.1 percent each versus the USD and the GBP to trade at $1.2380 and £0.7974, respectively. The JPY has risen 0.1 percent against the EUR while it has marginally declined against the USD. The AUD and the CAD have declined 0.4 percent and 0.1 percent versus the USD, respectively.

Macro Update
Japanese official reserve assets drop
The official reserve assets in Japan declined to $1.271 trillion in June compared to $1.278 trillion recorded in the previous month.
Japanese leading index climbs
The leading index in Japan edged up to a reading of 95.9 in May compared to a reading of 95.6 posted in the previous month. Meanwhile, the coincident index declined to a reading of 95.8 in May following a reading of 97.0 recorded in April.
Australian construction sector continues to contract
Australian Industry Group has reported that the Performance of Construction Index stood at a reading of 34.8 in June compared to a reading of 34.7 posted in the previous month.

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