Article / 17 February 2012 at 7:08 GMT

Market Preview - 17 February 2012

Saxo Capital Markets UK
United Kingdom

Forex Overnight: EUR trading almost unchanged
The EUR is trading flat against most of the majors, ahead of the European finance ministers’ meeting scheduled for February 20, aimed at discussing Greece’s second bailout deal. Reports indicate that the European Central Bank (ECB) is set to swap its holdings of Greek bonds with new bonds in a move to avoid losses in a debt restructuring. Meanwhile, markets await German producer price inflation and Eurozone current account data scheduled for release later today. At 6 am, the EUR is trading almost unchanged against the USD and the GBP at $1.3133 and £0.8310, respectively.
The JPY is trading 0.2 percent lower against both the EUR and the USD.
The AUD has advanced 0.2 percent against the USD, on the back of yesterday’s upbeat U.S. economic data.

UK Stocks: Expected to open in positive territory
The FTSE 100 is likely to open 16 to 19 points in the green.
Retail Sales is the key economic indicator scheduled for release today.
Anglo American and Spectris are scheduled to report their results later today.
Bloomberg has reported that BP and Reliance Industries Limited have won an approval from the Indian government to prepare a plan to develop a natural gas discovery in the Bay of Bengal.
The Edge has reported that Malaysia’s CIMB Group Holdings Bhd is set to acquire Royal Bank of Scotland’s Australian equity operations for a consideration of $50.0 million.

Asia: Trading in the green
Asian markets are trading higher this morning, taking cues from overnight gains on Wall Street.
In Japan, Bridgestone Corporation has climbed, after it forecast a significant rise in its full year net income. Daiwa House Industry has advanced, following a broker upgrade on the stock to “Out-Perform” from “Neutral”. Japan Tobacco has risen, after a broker hiked its target price on the stock. Export sector stocks with large exposure to Europe, Nikon and Honda Motor, have gained value. Higher crude oil prices have helped Inpex Corporation and Japan Petroleum Exploration to edge up. At 6 am, the Nikkei 225 index has climbed 1.7 percent to trade at 9,395.5.
In South Korea, Woori Finance Holdings has surged, after its fourth quarter profit increased almost sevenfold. SK Innovation has advanced, after a regulatory filing indicated that the company is reviewing various acquisition targets. In Hong Kong, Sands China and Wynn Macau have risen, following positive broker comments. On the contrary, Citic Pacific declined, after a broker downgraded its rating on the stock to “In-line” from “Out-Perform”. In China, China Life Insurance has climbed, after it reported a 12.0 percent increase in its premium income in January. Gemdale and China Vanke have dropped, amid news that the government will keep property curbs in place for the long term.

US Stocks: Futures trading marginally lower
At 6 am, S&P 500 futures are trading 0.1 points weaker.
Consumer Price Index and Leading Indicators are the key economic indicators scheduled for release today.
EOG Resources, H J Heinz Company, Ventas and Campbell Soup are scheduled to announce their results today.
Applied Material surged 5.6 percent, in the after hours trading session yesterday, on better-than-expected earnings for the first quarter. Sun Power surged 11.9 percent, after its adjusted earnings for the fourth quarter surpassed market expectation. On the contrary, Allscripts Healthcare Solutions dropped 5.7 percent, after it issued a cautious profit outlook for the first quarter. Frontier Communications declined 4.7 percent, after it reduced its quarterly dividend by 47.0 percent to 10 cents per share. Nordstrom edged 0.9 percent lower, after it issued a weak 2012 profit forecast.
The S&P 500 index climbed 1.1 percent, in the regular trading session yesterday, on the back of strong U.S. economic data, and amid increased hopes that Greece may clinch a bailout deal from the Troika next week. NetApp surged 7.2 percent, after its third quarter revenue exceeded market expectation. Apple edged 0.9 percent higher, after it released a developer preview of an update for the Mac operating system, named “Mountain Lion”. Citigroup and Goldman Sachs advanced 3.1 percent and 1.4 percent, respectively. On the other hand, J.M. Smucker slumped 8.4 percent, after its adjusted third quarter earnings missed market estimate and it issued a weaker-than-expected earnings guidance for 2012. declined 2.5 percent, after a broker downgraded its rating on the stock to “Equal-Weight”.

European Stocks: Likely to open in the green
The DAX and CAC are expected to open 35 to 38 points and 21 to 23 points firmer, respectively.
German Producer Price Index & Services Purchasing Managers’ Index (PMI) and Eurozone Services PMI, Current Account and Construction Output are the key economic indicators scheduled for release today.
Air Liquide SA, Lafarge SA, SES SA, Aegon NV and Oriflame Cosmetics SA are scheduled to announce their results today.
The Wall Street Journal has reported that UBS AG has admitted to Canadian regulators that a group of traders and brokers had successfully managed to manipulate key interbank lending rates that affect loans around the world.
Enel SpA has stated it has successfully placed its €3.0 billion offering of fixed and floating rate bonds among retail investors.
National Institute for Health and Clinical Excellence has asked Roche Holding AG for more information on its pill, Tarceva, which the former is considering as a first-line treatment for lung cancer patients.

Macro Update
ECB to swap Greek bonds to avoid forced losses, indicates reports
ECB is set to swap its holdings of Greek bonds with new bonds to ensure that it is not forced to take losses in a debt restructuring.
Caution over Europe remains necessary, indicates BoJ minutes
The minutes of the latest policy meeting of the Bank of Japan (BoJ) indicated that policymakers believe that the Eurozone sovereign debt crisis is the biggest risk for Japanese economy and noted that caution over its impact is still needed.
House Republicans warn of European-style debt crisis
House Republicans have cautioned that the White House’s budget proposal for fiscal year 2013 has made a European-style debt crisis more likely for the U.S.
Bernanke defends low rates to community bankers
Ben S. Bernanke, the Chairman of the Federal Reserve, has indicated to community bankers that he recognises that the central bank’s low interest rates affect their profitability, but he added that the policy is required to boost the economy.

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