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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 01 May 2012 at 6:17 GMT

Market Preview - 1 May 2012; Eyes on US ISM Manufacturing Index

Saxo Capital Markets UK
United Kingdom

Forex Overnight: EUR trading mostly firmer
The EUR is trading higher against most of the major currencies this morning ahead of a Spanish bond auction later this week. Meanwhile, Luxembourg Prime Minister, Jean-Claude Juncker, stated that he is resigning as head of the group of Euro area finance ministers due to the constant Franco-German interference in managing the Eurozone debt crisis. Market participants are also keeping an eye on data due later today which is anticipated to show that US manufacturing activity deteriorated in April. At 5 am GMT, the EUR has advanced 0.1 percent each against the USD and the GBP to trade at $1.3252 and £0.8166, respectively.
The AUD has weakened 0.9 percent against the USD after the Reserve Bank of Australia (RBA) cut its official cash rate by 50 basis points to 3.75 percent.

UK Stocks: Expected to open higher

The FTSE 100 is likely to open 5 points in the green.
Manufacturing Purchasing Managers’ Index (PMI) is the key economic indicator scheduled for release today.
BP, Reckitt Benckiser Group, Imperial Tobacco Group, N Brown Group and CSR are scheduled to report their results today.
According to Reuters, Royal Dutch Shell had an operational issue at its 75,000 barrel per day refinery at Sarnia, Ontario.
The Financial Times has reported that Legal & General made its first venture into property lending in a move to take advantage of the opportunity created by the retreat of bank finance.

Asia: Trading mixed
Asian markets are trading mixed this morning.
In Japan, Sharp Corporation has dropped after it forecast a wider-than-estimated loss for the full year. Nippon Electric Glass and Tokyo Electron have plunged after their earnings guidance trailed market expectations. Yamada Denki has slumped after the company cut its full-year earnings forecast. Exporters, Toyota Motor, Honda Motor and Sony Corporation are trading lower. Financial sector stocks, Mitsubishi UFJ Financial Group, Nomura Holdings and Daiwa Securities Group have declined after Standard & Poor’s downgraded its rating on 16 Spanish banks. On the other hand, Denso Corporation has advanced after it reported a higher-than-estimated fourth quarter operating profit. At 5 am GMT, the Nikkei 225 index has lost 1.4 percent to trade at 9,390.5.
Markets in China, Hong Kong and South Korea are closed on account of Labour Day.

US Stocks: Futures trading higher
At 5 am GMT, S&P 500 futures are trading 2.8 points firmer.
ISM Manufacturing, Construction Spending and Total Vehicle Sales are the key economic indicators scheduled for release today.
Pfizer, Emerson Electric, Automatic Data Processing, Cummins, Archer Daniels Midland, Broadcom Corporation, Becton Dickinson, Valero Energy Corporation, Chesapeake Energy Corporation and Motorola Mobility Holdings are scheduled to announce their results today.
In the after hours trading session on Monday, Anadarko Petroleum Corporation gained 0.9 percent after its first quarter results exceeded market expectations. PLX Technology rallied 65.6 percent after Integrated Device Technology agreed to buy the company for a consideration of around $330.0 million. Better-than-expected first quarter results and upbeat earnings guidance for the second quarter led Veeco Instruments to soar 14.0 percent. Shutterfly surged 11.0 percent after it posted a narrower-than-expected loss for the first quarter and provided buoyant revenue guidance for the full year. On the downside, lower-than-expected third quarter earnings dragged WMS Industries 14.7 percent lower. QuinStreet tumbled 14.4 percent after its third quarter results trailed market expectations.
Yesterday the S&P 500 index eased 0.4 percent in the regular trading session after data indicated that the Chicago business activity expanded at the slowest pace since November 2009 and Spain entered into a recession in the first quarter of 2012. Humana plunged 8.1 percent after its first quarter profit fell short of market estimates. NYSE Euronext dropped 4.9 percent after it posted a sharp decline in its net income for the first quarter. Financial sector stocks, Suntrust Banks, Regions Financial Corporation and Bank of America shed 2.1 percent, 2.0 percent and 1.7 percent, respectively, amid lower risk appetite amongst investors. On the contrary, Sunoco soared 20.5 percent after Energy Transfer Partners LP agreed to acquire the company for a stock and cash consideration of about $5.3 billion. Harman International Industries jumped 4.9 percent after its third quarter profit surpassed market consensus and it announced a $2.0 billion contract. Cerner Corporation climbed 4.6 percent after a broker upgraded its rating on the stock to “Out-Perform” from “Market-Perform”.

European Stocks: Markets are closed
Markets in Germany and France are closed today on account of Labour Day.
No key economic indicators are scheduled for release today.
Prologis European Properties SARL is scheduled to report its results today.
Hermes International has won a judgment that includes $100.0 million in damages against 34 websites that sold duplicate copies of its luxury goods.
According to Bloomberg, Repsol YPF SA has blocked a shipment of liquefied natural gas to Argentina as the Argentine government failed to provide the company with a letter of credit.

Macro Update
RBA cuts key interest rate
The RBA has reduced its official cash rate more-than-expected by 50 basis points to 3.75 percent.
Chinese official manufacturing PMI improves
China’s official manufacturing PMI rose to a reading of 53.3 in April compared to a reading of 53.1 recorded in the previous month.
Manufacturing activity in Australia contracts
The performance of manufacturing index in Australia, as reported by the Australian Industry Group, fell to a reading of 43.9 in April compared to a reading of 49.5 recorded in the previous month.
Australian house prices drop
On a quarterly basis, the house price index in Australia has declined more-than-expected by 1.1 percent in the first quarter compared to a revised 0.7 percent drop recorded in the previous quarter.
South Korean inflation moderates, exports decline
On a year-on-year basis, South Korea’s consumer price index rose 2.5 percent in April, the slowest pace of increase since July 2010 and compared to a 2.6 percent rise recorded in the previous month. Meanwhile, on an annual basis, South Korean exports fell 4.7 percent in April compared to a 1.4 percent drop posted in March.

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/
*Actual

Previous

Frequency

China

1:00

Manufacturing Purchasing Managers' Index (Apr)

Medium

53.30*

53.10

Monthly

Japan

5:00

Vehicle Sales (YoY) (Apr)

Low

92.00%*

78.20%

Monthly

UK

8:30

Manufacturing Purchasing Managers' Index (Apr)

Medium

51.50

52.10

Monthly

US

14:00

ISM Manufacturing (Apr)

High

53.00

53.40

Monthly

US

14:00

ISM Prices Paid (Apr)

Medium

59.00

61.00

Monthly

US

14:00

Construction Spending (MoM) (Mar)

Medium

0.40%

-1.10%

Monthly

US

15:00

Fed's Williams Speaks on Economy in Los Angeles

Low

-

-

-

US

16:30

Fed's Lockhart Speaks on Monetary Policy

Low

-

-

-

US

19:00

Fed's Plosser Gives Economic Outlook in San Diego

Low

-

-

-

US

21:00

Domestic Vehicle Sales (Apr)

Low

11.30 mn

11.09 mn

Monthly

US

21:00

Total Vehicle Sales (Apr)

Low

14.50 mn

14.32 mn

Monthly

Japan

23:50

Monetary Base (YoY) (Apr)

Medium

-

-0.20%

Monthly

Japan

-

Official Reserve Assets (Apr)

Low

-

$1288.70 bn

Monthly

World

-

WTO's General Council Meets in Geneva

Medium

-

-

-


See TradingFloor.com's full real-time updated financial calendar

Corporate Calendar

Country

Company Name

Index

Announcement

UK

BP Plc

FTSE All Share

Q1 Earnings Release

UK

Chemring Group Plc

FTSE All Share

Trading

UK

CSR Plc

FTSE All Share

Q1 Earnings Release

UK

Development Securities Plc

FTSE All Share

Prelim

UK

Imperial Tobacco Group Plc

FTSE All Share

Interim

UK

Lloyds Banking Group

FTSE All Share

Trading

UK

Man Group Plc

FTSE All Share

Trading

UK

N Brown Group Plc

FTSE All Share

Prelim

UK

Reckitt Benckiser Group Plc

FTSE All Share

Q1 Earnings Release

US

Archer Daniels Midland Co.

S&P 500

Q3 Earnings Release

US

Automatic Data Processing Inc.

S&P 500

Q3 Earnings Release

US

Avon Products Inc.

S&P 500

Q1 Earnings Release

US

Becton Dickinson and Co.

S&P 500

Q2 Earnings Release

US

Biogen Idec Inc.

S&P 500

Q1 Earnings Release

US

Boston Properties Inc.

S&P 500

Q1 Earnings Release

US

Broadcom Corporation

S&P 500

Q1 Earnings Release

US

CBS Corporation

S&P 500

Q1 Earnings Release

US

Chesapeake Energy Corporation

S&P 500

Q1 Earnings Release

US

Cummins Inc.

S&P 500

Q1 Earnings Release

US

DaVita Inc.

S&P 500

Q1 Earnings Release

US

Dentsply International Inc.

S&P 500

Q1 Earnings Release

US

Ecolab Inc.

S&P 500

Q1 Earnings Release

US

Emerson Electric Co.

S&P 500

Q2 Earnings Release

US

Fiserv Inc.

S&P 500

Q1 Earnings Release

US

Genworth Financial Inc.

S&P 500

Q1 Earnings Release

US

Harris Corporation

S&P 500

Q3 Earnings Release

US

Hospira Inc.

S&P 500

Q1 Earnings Release

US

Legg Mason Inc.

S&P 500

Q4 Earnings Release

US

Marsh & McLennan Companies Inc.

S&P 500

Q1 Earnings Release

US

Motorola Mobility Holdings Inc.

S&P 500

Q1 Earnings Release

US

Nisource Inc.

S&P 500

Q1 Earnings Release

US

Pfizer Inc.

S&P 500

Q1 Earnings Release

US

TECO Energy Inc.

S&P 500

Q1 Earnings Release

US

TripAdvisor Inc.

S&P 500

Q1 Earnings Release

US

Unum Group

S&P 500

Q1 Earnings Release

US

Valero Energy Corporation

S&P 500

Q1 Earnings Release

US

Wisconsin Energy Corporation

S&P 500

Q1 Earnings Release

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