Market Preview - 8 June 2012, Eyes on German trade data

Forex Overnight: EUR trading lower
The EUR has weakened against the major currencies early Friday ahead of the data expected to show that German exports declined in April fuelling concerns about the Eurozone debt crisis. Additionally, Fitch Ratings (Fitch) lowered Spain's long-term foreign and local currency Issuer Default Ratings (IDR) by three notches to “BBB” from “A” with a negative outlook.

At 5 am GMT, the EUR has retreated 0.3 percent against the USD and has declined marginally against the GBP to trade at $1.2527 and £0.8087, respectively.

The AUD has declined 0.3 percent against the USD after data indicated that Australia recorded a trade deficit for a fourth consecutive month in April.

The JPY has advanced 0.7 percent and 0.4 percent versus the EUR and the USD, respectively.

UK Stocks: Expected to open in negative territory
The FTSE 100 is likely to open 28 to 30 points in the red.
Producer Price Index - Input & Output are the key economic indicators scheduled for release today. Additionally, investors await the Bank of England/GfK inflation target for the next 12 months later today.
Hornby Plc is scheduled to report its results.
Royal Dutch Shell has stated that it was closing down an unspecified unit at the upgrader facility of its Scotford refinery near Edmonton, Alberta.
The Queensland Government has given the final approval to Anglo American for the construction of a coal mine worth A$1.7 billion.
Ivan Glasenberg, the CEO of Glencore International, has stated that he was willing to accept the retention package of Xstrata to retain the latter’s CEO, Mick Davis, once the companies are merged.
The Telegraph has reported that Marks & Spencer is expected to announce plans today to open banks at 50 of its branches over the next two years starting with its flagship store in central London in July.

Asia: Trading mostly lower
Asian markets are trading mostly in negative territory after the Federal Reserve Chairman, Ben Bernanke, failed to provide any definite clue over further easing.
In Japan, resources sector stocks, Pacific Metals Company, Nippon Steel Corporation, Inpex Corporation and JX Holdings are trading in the red. Sony Corporation has dropped after a broker lowered its rating on the stock to “Equal-weight”. Export sector stocks with a significant exposure to the US, Mazda Motors and Dainippon Sumitomo Pharma Company are trading lower. On the upside, Renesas Electronics has soared following news that the company has abandoned plans to sell shares worth ¥100.0 billion. Advantest has climbed after a broker upgraded its rating on the stock to “Buy” from “Sell”. At 5 am GMT, the Nikkei 225 index has dropped 2.0 percent to 8,463.5.
In Hong Kong, banking sector stocks, Bank of Communications Company and Industrial & Commercial Bank of China have lost value. In South Korea, automobile sector stocks, Hyundai Motor and Kia Motors are trading lower. On the other hand, Hyundai Steel and Posco have climbed. In China, property sector stocks, Poly Real Estate Group Company and Gemdale Corporation have gained, after the People’s Bank of China yesterday unexpectedly lowered its interest rate in a move to boost its economy.

US Stocks: Futures trading in the red
At 5 am GMT, S&P 500 futures are trading 6.5 points weaker.
Trade Balance and Wholesale Inventories are the key economic indicators scheduled for release today.
Piedmont Natural Gas Company, KMG Chemicals, Exide Technologies and Rand Logistics are scheduled to announce their results today.
Altera Corporation edged 1.5 percent higher in after hours trading session on Thursday after it reiterated its second quarter revenue guidance. Francesca’s Holdings rallied 17.4 percent after its first quarter results exceeded market estimates and it offered a buoyant guidance for the second quarter. Better-than-anticipated third quarter income led Comtech Telecommunications to rise 2.2 percent. On the contrary, Cooper Companies slumped 5.6 percent after it posted lower-than-expected second quarter earnings and slashed its full year earnings forecast. Progress Software tumbled 9.4 percent after it provided downbeat revenue and earnings forecast for the second quarter. Wider fourth quarter net loss led Rentrak to plunge 8.7 percent.
Yesterday, the S&P 500 index slipped 0.1 points in the regular trading session as optimism about China’s interest rate cut was offset by Ben S. Bernanke’s remarks that dented hopes for more monetary stimulus measures in the US. Pall Corporation dropped 4.3 percent after it reported lower-than-expected third quarter results. NVIDIA Corporation slumped 4.0 percent after a broker cut its target price on the stock. Best Buy declined 0.9 percent after Richard Schulze, its Founder and Chairman, resigned from the Board earlier than planned. On the upside, Regions Financial Corporation gained 2.4 percent after a broker upgraded its rating on the stock to “Out-Perform” from “Neutral”. Industrial sector stocks, United Technologies and Boeing added 2.4 percent and 1.4 percent, respectively.

European Stocks: Likely to open lower
The DAX and CAC are expected to open 37 to 39 points and 32 to 35 points in negative territory, respectively.
German Wholesale Price Index, Current Account Balance & Trade Balance, French Central Government Balance & Trade Balance, Portuguese Gross Domestic Product (GDP) and Greek Consumer Price Index and Industrial Production are the key economic indicators scheduled for release today.
Oeneo SA and Systemair AB are scheduled to announce their results today.
Christophe de Margerie, the CEO of Total SA, has indicated that it is maintaining its target of a 2.5 percent annual increase in oil and gas production and expects to resume production at its Elgin complex before the end of 2012.
Siemens AG has stated that it plans to relocate its wind energy services business in Bremen to Hamburg due to high price pressure and severe competition in the wind energy industry.
Snam SpA has entered into an agreement with eleven banks for credit lines worth €11.0 billion as a significant step towards its financial separation from Eni SpA.

Macro Update
Fitch downgrades Spain’s credit rating
Fitch has downgraded Spain’s long-term foreign and local currency IDR by three notches to “BBB” from “A” with a negative outlook.
Fitch reiterates warning of US downgrade in 2013
According to Reuters, Fitch has cautioned that the US might lose its “AAA” rating in 2013 if the nation’s leaders fail to reach an agreement to significantly reduce the budget deficit and create a “credible” fiscal consolidation plan.
Job growth remains ‘disappointing’, says Fed’s Kocherlakota 
Minneapolis Fed President, Narayana Kocherlakota, has warned that the employment growth in the US remains “disappointing” and that a high unemployment rate might persist even under a suitable monetary policy.
US consumer credit rises less-than-expected
The consumer credit in the US has climbed less-than-expected by $6.5 billion in April, the eighth consecutive monthly rise and following a downwardly revised $12.4 billion gain posted in the previous month.
Japanese GDP upwardly revised
On a sequential basis, the GDP in Japan rose 1.2 percent in the first quarter of 2012 compared to a preliminary estimate of a 1.0 percent growth.
Japanese current account surplus narrows
The current account surplus in Japan stood at ¥333.8 billion in April compared to a ¥1589.4 billion surplus posted in the previous month.
Australian trade deficit shrinks
The trade deficit in Australia stood at A$203.0 million in April compared to an A$1.282 billion deficit recorded in the prior month.
Bank of Korea retains key interest rate
The Bank of Korea has kept its benchmark interest rate unchanged at 3.25 percent.

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