Market Preview - 8 June 2011

Forex Overnight: EUR is trading lower
The EUR is trading lower against the USD this morning, after the German Finance Minister, Wolfgang Schaeuble, stated that bondholders must contribute a “substantial” share of a second stimulus package for Greece. Yesterday, the Federal Reserve Chairman, Ben S. Bernanke, indicated that the US central bank should continue its monetary stimulus policy to boost an “uneven” and “frustratingly slow” recovery in the economy.

The JPY is trading 0.1% higher against the USD.

At 6am, the EUR is trading 0.2% lower against the USD at $1.4663, and the GBP is trading 0.2% lower against the USD at $1.6420. The EUR is trading marginally lower against the GBP at £0.8930.

The AUD is trading 0.5% lower against the USD.

UK Stocks: Likely to open lower
UK markets are likely to open lower, with the FTSE 100 expected to open 17 to 29 points lower.

Punch Taverns, Hyder Consulting, GB Group, Dewhurst and Walker Crips Group are scheduled to report their results later today.

Cairn Energy awaits a ruling later today, against the environmental group, Greenpeace, from further disrupting its drilling activities offshore Greenland.

British Airways, a part of the International Consolidated Airlines Group, and Chilean carrier, Lan Airlines, have agreed to pay a total of about $155.5 million to cargo customers as a settlement of a US lawsuit over their involvement in fixing the price of global air-cargo freight shipping.

According to Reuters, a key gasoline-making fluid catalytic cracking unit, at BP’s Texas refinery, has been shut for 48 hours for maintenance, from Tuesday, in order to allow work on a wet gas scrubber.

Asia: Trading lower
Asian markets are trading lower this morning, tracking overnight movement on Wall Street.

In Japan, Tokyo Electric Power is trading lower, amid news that all nuclear reactors in Japan may be idled. Nintendo is trading lower, as the features of its new video-game console failed to impress investors. Kawasaki Kisen Kaisha is trading higher, after a broker upgraded its rating on the stock to “Out-perform” from “Neutral”. At 6 am, the Nikkei is trading 0.3% lower at 9,414.5.

In South Korea, Hyundai Heavy Industries is trading lower, amid news of its interest in a stake in Hynix Semiconductor. In Hong Kong, markets are trading lower, led by declines in financial and commodity sector stocks. In China, China Merchants Bank and Industrial & Commercial Bank of China are trading lower as risk appetite amongst investors waned. Huaneng Power International and Yanzhou Coal Mining are trading lower, amid news that China would issue new pollution standards for coal-fired power plants in 2011.

US Stocks: Futures trading lower
US stock index futures are trading lower at 6am, with the S&P 500 Index futures down 1.6 points.

Key economic releases today include Fed Beige Book Economic Survey, MBA Mortgage Applications and EIA Crude Oil Stocks Change.

In corporate releases, Pall Corporation, Greif, Men's Wearhouse, Ciena Corporation and Piedmont Natural Gas Company would announce their results today.

In after hours trade yesterday, Ulta Salon Cosmetics & Fragrance surged 13.7%, after posting better-than-expected first-quarter profit. Oxford Industries gained 5.6%, after posting higher first-quarter profit and boosting earnings outlook for FY 2011. Hovnanian Enterprises retreated 5.6%, after recording higher second-quarter losses. Hill-Rom Holdings lost 4.2%. Molycorp dropped 2.9%, following its plans to offer $200 million of its convertible senior notes due 2016 and an additional $30 million of the notes to the initial purchasers. LDK Solar fell 2.1%, following a weak outlook.

Yesterday, the S&P 500 index lost 0.1%, as investors were disappointed on receiving no hint from the Federal Reserve Chairman, Ben S. Bernanke, of any new round of economic stimulus. Cablevision Systems added 4.5%, following its announcement of the spin-off of one of its units, AMC Networks, and after positive broker comments. Technology sector stocks, F5 Networks and Intel Corporation, advanced 4.6% and 1.1%, respectively, while Cisco Systems and Hewlett- Packard retreated 3.0% and 1.1%, respectively. Avery Dennison dropped 3.8%, after it was downgraded by an analyst.

European Stocks: Expected to open lower
European markets are expected to open lower. The DAX is likely to open 28 to 38 points lower, while the CAC is expected to open 20 to 23 points lower.

Investors await German Current Account, Trade Balance, Industrial Production, Euro-zone’s Gross Domestic Product, Gross Fixed Capital, French Trade Balance and Swiss Unemployment Rate.

Kabel Deutschland Holding, Thrane & Thrane, Gifi and Beate Uhse are scheduled to report their results later today.

French food ingredients maker, Eurogerm, has announced a joint venture with a Japanese group, Nisshin Seifun in Shanghai, China.

Deutsche Boerse and NYSE Euronext have pledged to pay a one-time dividend of about €620.0 million, as a move to win shareholders approval for the merger.

The Financial Times has reported that Hochtief has launched the auction of its airport business, in order to dispose off the non-core assets, and to improve its profile with investors.

Man Se’s board has rejected the takeover bid by Volkswagen, citing low offer price, and has asked shareholders to turn it down.

Macro Update
UK’s shop price inflation slows in May, indicates BRC

British Retail Consortium (BRC) has reported that its shop price index in the UK rose 2.3% YoY in May, compared to a 2.5% rise posted in the previous month.

Economic growth to pick up in second half of 2011, says Bernanke

The Federal Reserve Chairman, Ben Bernanke, has indicated that the US economy should rebound in the second half of the year as the labour market gradually improves. Additionally, he stated that the Fed would take necessary actions to keep inflation well controlled.

Japan’s current account surplus narrowed in April

The current account surplus in Japan stood at ¥405.6 billion in April, compared to a ¥1.679 trillion surplus posted in the previous month.

South Korea’s economy expands in 1Q FY2011

On a sequential basis, the gross domestic product (GDP) in South Korea climbed 1.3% in the first quarter of 2011, compared to a previous estimate of 1.4% growth.

World Bank lowers global, US GDP forecast

The World Bank has reduced its forecast for 2011 global and US growth to 3.2% and 2.6%, respectively, compared to the previous estimate of 3.3% and 2.8% growth, respectively.

Economic Calendar

Note: PPPHigh           PPMedium           PLow

 Corporate Calendar