Article / 11 July 2012 at 6:05 GMT

Market Preview - 11 July 2012; FOMC minutes top agenda

Saxo Capital Markets UK
United Kingdom

Forex Overnight: USD trading lower
The USD is trading weaker against most of its major peers early Wednesday ahead of the minutes of the Federal Reserve’s (Fed) latest monetary policy meeting scheduled later. During the last meeting, the Fed Chairman, Ben Bernanke, had signaled possibilities of further stimulus. Meanwhile, news reports suggest that the German constitutional court might take three months to come to a conclusion on ESM ratification. At 5 am GMT, the EUR is trading 0.1 percent higher against the USD at $1.2258, while the GBP is trading marginally lower against the USD at $1.5519.
The JPY is trading 0.1 percent firmer against the USD amid speculation that the Bank of Japan might refrain from additional easing at its two day monetary policy meeting ending tomorrow.

UK Stocks: Likely to open in negative territory
The FTSE 100 is expected to open 25 to 27 points weaker.
No major economic indicators are scheduled for release today.
Picton Property Income, Daejan Holdings and Brainspark are scheduled to announce their results today.
BP has indicated that it has shelved its Liberty offshore drilling project in Alaska as its current plan was not in compliance with the stringent standard it enacted after the Deepwater Horizon incident.
Xstrata has opened its first office in China in an attempt to source high quality mining equipment from the nation and other Asian countries.
The Financial Times has reported that top shareholders of Barclays have called for the appointment of an external Chairman.
According to Reuters, Bob Diamond, the former CEO of Barclays, has been accused of allegedly misleading a parliamentary committee enquiry into the LIBOR scandal.

Asia: Trading under pressure
Asian markets are trading lower this morning mirroring overnight losses on Wall Street.
In Japan, Advantest Corporation and Renesas Electronics Corporation have registered losses after their US peer, Applied Materials, lowered its full year sales and profit outlook. Sony, Komatsu Limited, Fanuc and Kyocera have declined as the Yen strengthened against the US Dollar and the Euro. Energy sector stocks, Inpex Corporation and Japan Petroleum Exploration have recorded losses. At 5 am GMT, the Nikkei 225 index has dropped 0.4 percent to trade at 8,817.5.
In South Korea, shipbuilding sector stocks, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering have lost value. Samsung Electronics and SK Hynix have edged lower following bleak quarterly outlook from Applied Materials and Advanced Micro Devices. In Hong Kong, Industrial & Commercial Bank of China, China Construction Bank and China Overseas Land & Investment have declined amid lower risk appetite amongst investors. In China, China Southern Airlines has slipped after it stated that its first half year profit might decline significantly. On the other hand, China Railway Erju and CSR Corporation have advanced after the Chinese Premier, Wen Jiabao, stated that promoting “reasonable” growth in investment is essential.

US Stocks: Futures trading in the green
At 5 am GMT, S&P 500 futures are trading 0.5 points firmer.
Trade Balance, Wholesale Inventories and MBA Mortgage Applications are the key economic indicators scheduled for release. Additionally, investors await the minutes of the Fed’s latest monetary policy meeting.
Marriott International, Adtran Inc., Texas Industries, API Technologies, Material Sciences and Northern Technologies International are scheduled to announce their results today.
HHGregg plunged 21.1 percent in after hours trading session yesterday after it forecast weak first quarter results and lowered its full year guidance. VOXX International and OCZ Technology Group plummeted 15.9 percent and 9.2 percent, respectively, tracking downbeat first quarter earnings. Goldcorp dropped 3.0 percent after it lowered its production outlook for 2012. Chubb Corporation lost 1.0 percent after it estimated second quarter catastrophe losses before tax in the range of $200.0 million to $240.0 million. On the upside, Obagi Medical Products, Xyratex and OraSure Technologies climbed 11.5 percent, 3.5 percent and 2.9 percent, respectively.
The S&P 500 index dropped 0.8 percent in the regular trading session yesterday as concerns about global economic growth grew following dismal outlook from major US companies. Resource sector stocks, Chesapeake Energy Corporation, Alpha Natural Resources and Denbury Resources retreated 6.5 percent, 6.1 percent and 5.4 percent, respectively. Advanced Micro Devices tumbled 11.2 percent after it issued downbeat revenue forecast for the second quarter. Additionally, a broker reiterated its “Sell” rating on the stock. Micron Technology and SanDisk Corporation plunged 5.1 percent and 4.2 percent, respectively. Cummins plummeted 8.9 percent after it lowered its full year sales forecast. Alcoa lost 4.1 percent after it posted a loss for the second quarter. Applied Materials declined 2.7 percent after it warned that it would miss its full year sales and profit target and issued a dismal outlook for its third quarter results.

European Stocks: Expected to open in the red
The DAX and CAC are likely to open 23 to 29 points and 15 to 16 points lower, respectively.
German Consumer Price Index is the key economic indicator scheduled for release.
Hafslund ASA, Gerresheimer AG, Avanza Bank Holding AB and Corem Property Group AB are scheduled to report their results.
According to the Associated Press, ArcelorMittal SA and United Steelworkers union are in negotiations for a new labour contract.
The Financial Times Deutschland has reported that the German government has decided to let Deutsche Post AG maintain its monopoly, suspending plans by the Economy Minister, Philipp Roesler, to liberalise postal services.
Centrotherm Photovoltaics AG has submitted an application to the relevant District Court of Ulm for launching insolvency protection proceedings.

Macro Update
Fitch maintains “AAA” rating on US
Fitch Ratings (Fitch) has maintained its “AAA” credit rating on the US and has reaffirmed its “Negative” outlook.
Japan’s tertiary industry index climbs
On a seasonally adjusted monthly basis, the tertiary industry index in Japan has climbed 0.7 percent in May compared to a 0.3 percent decline posted in April.
Japan’s domestic CGPI declines
On a monthly basis, the domestic Corporate Goods Prices Index (CGPI) in Japan has declined 0.6 percent in June compared to a downwardly revised 0.5 percent fall reported in May.
Australia’s consumer sentiment improves
The Westpac/Melbourne Institute has reported that its consumer confidence index in Australia has jumped to a 5-month high reading of 99.1 in July compared to a reading of 95.6 posted in June.
Australian home loan approvals unexpectedly decline
The seasonally adjusted home loan approvals in Australia have surprisingly declined 1.2 percent in May following a revised 0.5 percent rise posted in April.
South Korea’s unemployment rate stabilises
On a seasonally adjusted basis, the unemployment rate in South Korea stood at 3.2 percent in June, unchanged from the rate recorded in May.

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/
*Actual

Previous/
**Previous Est.

Frequency

Germany

6:00

Consumer Price Index, EU Harmonised (YoY) (Jun)

High

2.00%

2.00%**

Monthly

Germany

6:00

Consumer Price Index (YoY) (Jun)

High

1.70%

1.70%**

Monthly

Germany

6:00

Consumer Price Index, EU Harmonised (MoM) (Jun)

High

-0.20%

 -0.20%**

Monthly

Germany

6:00

Consumer Price Index (MoM) (Jun)

High

-0.10%

 -0.10%**

Monthly

Japan

6:00

Machine Tool Orders, Prelim (YoY) (Jun)

Medium

-

-3.00%

Monthly

France

6:45

Current Account (May)

Medium

 -€3.50 bn

 -€4.20 bn

Monthly

Spain

7:00

House transactions (YoY) (May)

Low

-

-9.90%

Monthly

Portugal

9:00

Consumer Price Index (YoY) (Jul)

Low

2.80%

2.70%

Monthly

US

11:00

MBA Mortgage Applications (W/E)

Low

-

-6.70%

Weekly

US

12:30

Trade Balance (May)

Medium

 -$48.50 bn

 -$50.10 bn

Monthly

Canada

12:30

International Merchandise Trade (May)

Medium

 -C$0.43 bn

 -C$0.37 bn

Monthly

US

14:00

Wholesale Inventories (May)

Medium

0.30%

0.60%

Monthly

US

14:30

DOE US Crude Oil Inventories (Barrels) (W/E)

Low

 -1375.00 K

 -4270.00 K

Weekly

US

18:00

Fed Releases Minutes from June 19-20 FOMC meeting

High

-

-

-

China

-

Foreign Exchange Reserves (Jun)

Low

$3359.00 bn

$3305.00 bn

Monthly

China

-

M2 Money Supply (YoY) (Jun)

Low

10.60%

10.00%

Monthly


For more on today's events, visit the Financial Calendar

Corporate Calendar

Country

Company Name

Index

Announcement

UK

Barratt Developments Plc

FTSE All Share

Trading

UK

Burberry Group Plc

FTSE All Share

Trading

UK

Daejan Holdings Plc

FTSE All Share

Prelim

UK

Galliford Try Plc

FTSE All Share

Trading

UK

Hays Plc

FTSE All Share

Trading

UK

ICAP Plc

FTSE All Share

Trading

UK

JD Wetherspoon Plc

FTSE All Share

Trading

UK

Moneysupermarket.com Group Plc

FTSE All Share

Trading

UK

Picton Property Income Ltd

FTSE All Share

Final

UK

UK Mail Group Plc

FTSE All Share

Trading

US

Marriott International Inc.

S&P 500

Q2 Earnings Release


Ex-Dividend Calendar

Country

Company Name

Index

Announcement

No major ex-dividend company for today

 

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