Market Preview 12 September 2011

Forex Overnight: EUR trading lower
The EUR is under pressure against its major counterparts this morning amid increasing risk aversion and rising worries over the debt situation in Greece. Additionally, market speculation that Moody’s Investors Service might lower the credit rating of three large French banks also weighed on the EUR. At 6 am, the EUR has weakened 1.0 percent against the USD to trade at $1.3517, and has lost 0.7 percent against the GBP to trade at £0.8540.
The JPY is trading 1.5 percent and 0.5 percent higher, against the EUR and the USD, respectively. The Bank of Japan’s (BoJ) minutes of the latest policy meeting indicated that it saw the need to increase the size of its asset purchase programme.
The AUD has declined 1.2 percent against the USD, after Australia’s trade surplus narrowed more-than-expected in July.

UK Stocks: Expected to open in negative territory
The FTSE 100 is expected to open 62 to 72 points weaker.
There are no economic releases scheduled today.
Pan African Resources, InternetQ, Networkers International and Hellenic Carriers are scheduled to report their results today.
Iraq’s Oil Minister has stated that a top Iraqi government energy committee has approved a deal with Royal Dutch Shell and Mitsubishi Corporation to develop gas production in southern Iraq.
According to the Wall Street Journal, Virgin Money does not intend to bid for the 632 branches being sold by Lloyds Banking Group.
The Financial Times has reported that Verizon Communications has dismissed a return to a recurring dividend from Verizon Wireless, its U.S. mobile phone joint venture with Vodafone Group.
The Observer has reported that the Founder of ENRC, Alexander Machkevich, has made a bid to become the company's Chairman.
According to the Financial Times, Yell Group is set to seek renegotiation from HSBC Holdings, for its £2.7 billion debt.

Asia: Trading in the red
Persistent worries about sovereign debt crisis in Greece are weighing on Asian markets this morning.
In Japan, markets are trading under pressure, with banking and export sector stocks trading in negative territory. Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group have dropped, amid fears that Eurozone’s debt crisis might hurt the global financial system. The strengthening of the yen against its major counterparts has weighed on export sector stocks, with Sony Corporation and Kyocera Corporation trading in the red. Honda Motor has retreated, after it indicated that it is recalling around 347,000 Pilot SUV’s globally. Kawasaki Heavy Industries Limited has lost value, after a broker lowered its rating on the stock to “Neutral” from “Neutral Plus”, while Sharp has declined, after a broker cut its price target on the stock. At 6 am, the Nikkei 225 has dropped 2.3 percent at 8,533.5.
In Hong Kong, HSBC Holdings has slumped, amid news that Mark McCombe, its Hong Kong Chief, was leaving the company. In China and South Korea, markets are closed on account of a holiday for Mid-Autumn Festival.

US Stocks: Futures trading weaker
At 6 am, S&P 500 Index Futures are trading 12.9 points in the red.
No economic indicators are scheduled for release today.
Brady, pSivida and ThermoGenesis are scheduled to announce their results today.
In after hours trade on Friday, Shoe Carnival, Clearwire, Web.com Group and Exide Technologies featured amongst major gainers, soaring 9.9 percent, 5.9 percent, 5.2 percent and 5.2 percent, respectively. Amongst the key losers, Mercury General, Brightpoint, Talbots and D.R. Horton retreated 4.2 percent, 4.0 percent, 3.0 percent and 2.8 percent, respectively.
In the regular session on Friday, the S&P 500 index dropped 2.7 percent, amid renewed concerns over Eurozone’s sovereign debt crisis, and after speculation that the Congress might not pass President, Barack Obama’s $447.0 billion jobs plan. Bank of America retreated 3.1 percent, amid news that it could layoff around 40,000 employees during the first phase of restructuring. VeriSign plunged 14.4 percent, following the resignation of Brian Robins, its CFO. Kroger slumped 5.7 percent, after its second quarter margins dropped. United States Steel Corporation, Freeport-McMoRan Copper & Gold and AK Steel Holding tumbled 5.6 percent, 5.2 percent and 4.9 percent, respectively, in line with the movement in base metal prices. McDonald’s Corporation declined 4.0 percent, after its global same-store sales climbed less-than-anticipated in August.

European Stocks: Likely to open in the red
The DAX and CAC are likely to open 66 to 72 points and 34 to 40 points lower, respectively.
No economic indicators are scheduled for release today.
Gruppo Coin SpA, Evolva Holding SA, Linedata Services SA, Groupe Open SA and Prowebce SA are scheduled to report their results later today.
In an interview with Frankfurter Allgemeine Zeitung, Dieter Zetsche, the CEO of Daimler AG, has indicated that the company’s Mercedes-Benz division is aiming to become the world’s largest maker of luxury vehicles by 2020.
The Sunday Times has reported that Deutsche Lufthansa AG has appointed Morgan Stanley to advise on the sale or break-up of BMI, its U.K. airline.
Der Spiegel has reported that Metro AG’s investor, Franz Haniel Cie GmbH, has opposed the extension of the contract of its CEO, Eckhard Cordes.
According to Bloomberg, Volkswagen AG has accused Suzuki Motor Corporation of breaking the rules of a cooperation agreement, by agreeing to purchase engines from Fiat SpA.

Macro Update
Chinese trade surplus narrows
China’s trade surplus narrowed sharply to $17.8 billion in August, compared to a $31.5 billion surplus in the previous month.
Fiscal policy must find ways to boost growth, say G-7 members
The Group of Seven (G-7) countries have agreed that fiscal policy must find ways to support growth even if austerity plans are underway. The meeting concluded with a commitment to present a "coordinated international response" to the multiple challenges facing economies world over.
Papandreou approves taxes and cuts
The Greek Prime Minister, George Papandreou, has unveiled new austerity measures including two-year property tax, and one month’s wage cut from all elected officials.
Need to increase asset buying in notable size, indicates BoJ minutes
The minutes of the Bank of Japan’s (BoJ) latest meeting indicate that board members agreed that the central bank should increase the size of asset purchases beyond the previous level to clearly demonstrate its easing stance.
Japanese domestic CGPI eases
On a monthly basis, the domestic corporate goods prices index (CGPI) in Japan dropped by a seasonally adjusted 0.2 percent in August, following an upwardly revised 0.3 percent rise in July.
Australian trade surplus rises
Australia’s seasonally adjusted trade surplus rose to A$1.826 billion in July, compared to a A$1.817 billion surplus in June.

Economic Calendar

Country	BST	Economic Indicator	Relevance	Consensus/*Actual	Previous	Frequency
Japan	0:50	BoJ to Publish Minutes of Aug. 4-5 Board Meeting	PPP	-	-	-
Japan	0:50	Tertiary Industry Index (MoM) (Jul)	PP	-0.10%*	1.80%	Monthly
Japan	0:50	Domestic Corporate Goods Price Index (MoM) (Aug)	P	-0.20%*	0.30%	Monthly
Japan	0:50	Domestic Corporate Goods Price Index (YoY) (Aug)	P	2.60%*	2.90%	Monthly
US	21:00	Fed's Fisher Speaks on Monetary Policy in Dallas	P	-	-	-
Japan	-	Nationwide Department Store Sales (YoY) (Aug)	P	-	-0.10%	Monthly
Japan	-	Tokyo Department Store Sales (YoY) (Aug)	P	-	-1.30%	Monthly

Note: PPPHigh           PPMedium           PLow

Corporate Calendar

Country	Company Name	Index	Announcement
UK	Associated British Foods Plc	FTSE All Share	Trading