Article / 18 November 2013 at 6:58 GMT

Market Preview: Comments from US Fed officials in focus

Saxo Capital Markets UK
United Kingdom

Forex Overnight: USD trading mostly lower
Currencies Intraday
Source: Bloomberg

The USD is trading weaker against most of its major counterparts this morning. While Janet Yellen, the US Federal Reserve chief nominee, looks in no hurry to taper the US central bank’s asset purchases any time soon, speeches from influential policymakers in the US scheduled later today will attract market attention for insights into their stances ahead of Wednesday’s Federal Open Market Committee minutes. With a light global economic calendar today, trade and current account data in the Eurozone will be eyed for further direction. At 06:00 GMT, the GBP has risen 0.1 percent versus the USD to trade at USD 1.6133 while the EUR is trading flat against the USD to trade at USD 1.3494.

The JPY has gained 0.3 percent and 0.2 percent against the EUR and the USD, respectively.

UK Stocks: Likely to open weak
FTSE 100
Source: Bloomberg

The FTSE 100 is expected to open five to seven points lower.

No key economic indicators are scheduled for release today.

AVEVA Group (AVV), Mitie Group (MTO), Diploma (DPLM), Majestic Wine (MJW) and Latchways (LTM) are scheduled to report their results today.

In an interview with the Financial Times, Ashok Vaswani, the head of retail and business banking at Barclays (BARC), warned of further branch closures and job cuts as the bank undergoes a dramatic transformation of its business.

Rolls-Royce Holdings (RR/) has announced that it won a USD five billion order from Abu Dhabi’s Etihad Airways for Trent XWB engines to power 50 Airbus A350 aircrafts.

Reuters has reported that Aberdeen Asset Management (ADN) is set to buy Scottish Widows Investment Partnership, an asset management firm, from Lloyds Banking Group (LLOY) for GBP 500 million.

Sky News has reported that Thomas Cook Group (TCG) might declare today that Harriet Green, its chief executive officer, has struck a deal to sell Thomas Cook Corporate Foreign Exchange for GBP five million to Moneycorp, a rival operator owned by funds affiliated to Royal Bank of Scotland (RBS).

Asia: Trading mostly in the green
Nikkei 225
Source: Bloomberg

Asian markets are trading mostly higher this morning.

In Japan, Tokyo Electric Power Company (9501) has added value amid reports that the company plans to cut around 1,000 jobs through voluntary retirements by the second half of 2014 in order to win more financial aid to clean up its Fukushima nuclear plant. Sony (6758) has edged higher amid reports of strong sales for its just-launched PlayStation 4 videogame console. On the flip side, Nikon (7731) has declined after a broker downgraded its rating on the stock. At 06:00 GMT, the Nikkei 225 has retreated 0.1 percent to trade at 15,154.2.

In China, markets are trading firmer after China’s Communist Party released details of its planned reforms. Zhejiang Beingmate Technology Industry & Trade (002570) and Beijing Aerospace Changfeng (600855) are trading higher. In Hong Kong, China Mengniu Dairy (2319) and China Modern Dairy Holdings (1117) have soared after China relaxed its one-child policy. Tingyi Cayman Islands Holding (322) has advanced after the company posted upbeat third quarter net profit. In South Korea, Dongbu Corporation (005960) has jumped after the company indicated that it plans to sell stakes in its electronics unit, Dongbu HiTek Company (000990) and Dongbu Metal Company and other assets, in an attempt to improve its financial health.

US Stocks: Futures trading lower
S&P 500
Source: Bloomberg

At 06:00 GMT, S&P 500 futures are trading 1.9 points in the red.

NAHB Housing Market Index and Net Long-Term TIC Flows are the key economic indicators slated for release today.

Tyson Foods (TSN), Urban Outfitters (URBN) and Pandora Media (P) are scheduled to report their results later today.

In the after hours trading session on Friday, JPMorgan Chase (JPM) added 0.2 percent after the company agreed to pay around USD 4.5 billion to settle claims with investors over mortgage-backed securities. On Track Innovations (OTIV) and Northern Tier Energy (NTI) extended their regular session gains and climbed 2.8 percent and 2.6 percent, respectively. On the flip side, GenCorp Inc. (GY), HomeAway (AWAY) and Oragenics (OGEN) reversed their regular session gains and slipped 6.2 percent, six percent and 3.6 percent, respectively.

On Friday, the S&P 500 index advanced 0.4 percent in the regular trading session amid ongoing speculation that the US Federal Reserve will keep the pace of its monthly bond purchases intact. Better than expected fourth quarter revenue and adjusted earnings led Agilent Technologies (A) to rally 8.7 percent. Exxon Mobil (XOM) gained 2.2 percent after a filing indicated that Warren Buffett’s Berkshire Hathaway (BRK/A) purchased a stake in the company worth around USD 3.7 billion. FedEx (FDX) added 1.6 percent after a filing indicated that billionaire investors, George Soros and John Paulson, acquired stakes in the company. J. C. Penney (JCP) added 3.9 percent after a filing indicated that a hedge fund, Appaloosa Management, acquired 737,800 shares in the company. Iron Mountain (IRM) soared 5.8 percent after the company indicated that a US agency, Internal Revenue Service, is evaluating its eligibility to convert to real estate investment trust. Mead Johnson Nutrition (MJN) climbed 4.9 percent after a broker reiterated its “Out-Perform” rating on the stock. On the other hand, Apple (AAPL) edged 0.6 percent lower after a market research firm survey indicated that the company’s market share for its iPhones declined in the third quarter. Western Union (WU) retreated 4.3 percent after the company stated that its chief finance officer, Scott Scheirman, would step down from his position on December 31, 2013. Kellogg (K) lost 1.1 percent following a broker downgrade. Electronic Arts (EA) slumped 7.3 percent after a broker indicated that video games sales have declined sharply in October.

Europe Stocks: Expected to open almost unchanged
EU Stoxx 50
Source: Bloomberg

The DAX is likely to open five points down while the CAC is expected to open flat.

Eurozone Trade and Current Account Balance are the key economic indicators slated for release today.

Sonova Holding AG (SOON), Subsea 7 SA (SUBC) and Mainova AG (MNV6) are scheduled to announce their results later today.

Xu Heyi, the chairman of BAIC Motor, the Chinese partner of Daimler AG (DAI), has indicated that both the companies would sign a new strategic co-operation agreement tomorrow.

Emirates has signed a deal with Airbus SAS, an aircraft manufacturing subsidiary of European Aeronautic Defence and Space Company NV (EAD), at the Dubai Air Show, placing an order for additional 50 Airbus A380 superjumbos.

Gael de Boissard, the co-head of Credit Suisse Group AG (CSGN), has stated that the bank would set up a new division, in order to combine its rates, foreign exchange and commodities operations as it plans to cut around 100 fixed income jobs in London and New York.

Reuters has reported that National Bank of Greece SA (ETE) is nearing a deal to sell a majority stake in Pangaia, its fully owned real estate subsidiary, to a private equity firm, Invel Real Estate.

Macro Update
ECB’s Coene expects no more interest rate cuts
In an interview with L’Echo, a Belgian newspaper, Luc Coene, the European Central Bank (ECB) governing council member, has indicated that a low Eurozone annual inflation rate had persuaded them to reduce the key interest rate to a record low in the policy meeting held earlier this month. However, he believes that in future, the ECB might not cut rates any further since it acted on time.

House prices in the UK decline, indicates Rightmove
Rightmove has reported that on a monthly basis, the average asking price for a home in the UK has dropped 2.4 percent in November compared to a 2.8 percent rise recorded in October.

China announces new reforms
While announcing several new reforms following the conclusion of the third plenum of the party’s 18th Central Committee, China stated that its economy is expanding at the slowest rate in more than two decades. The report further stated there is growing need for the Chinese government to create a new economic model for the country that relies less on exports and more on domestic consumption, gives small and medium sized businesses more scope, and allows the market to play a bigger role in the traditionally state-controlled economy.

China’s house prices rise
On an annual basis, the average new home prices in China have climbed in 69 of 70 large cities, tracked by the Chinese government, in October compared to a similar rise reported in the previous month.

New Zealand’s service sector expands further
The Performance of Services Index in New Zealand has climbed to a six-year high reading of 58.2 in October compared to a revised reading of 56.4 recorded in the previous month.

South Korean PPI falls
On an annual basis, the Producer Price Index (PPI) in South Korea has retreated 1.4 percent in October compared to a 1.8 percent drop recorded in the earlier month.

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/
*Actual

Previous

Frequency

UK

0:01

Rightmove House Price Index (MoM) (Nov)

Low

-2.40%*

2.80%

Monthly

UK

0:01

Rightmove House Price Index (YoY) (Nov)

Low

4.00%*

3.80%

Monthly

China

1:30

House Price Index (YoY) (Oct)

Low

9.60%*

9.10%

Monthly

Japan

4:00

Tokyo Condominium Sales (YoY) (Oct)

Low

21.40%*

77.30%

Monthly

Eurozone

8:30

ECB's Mersch Speaks in Frankfurt

Low

-

-

-

Eurozone

9:00

Current Account s.a (Sep)

Low

EUR 18.30 bn

EUR 17.40 bn

Monthly

Eurozone

9:00

Current Account n.s.a (Sep)

Low

EUR 18.00 bn

EUR 12.00 bn

Monthly

Eurozone

10:00

ECB's Jazbec Speaks in Vienna

Low

-

-

-

Eurozone

10:00

Trade Balance n.s.a. (Sep)

Medium

EUR 14.50 bn

EUR 7.10 bn

Monthly

Eurozone

10:00

Trade Balance s.a. (Sep)

Medium

EUR 13.00 bn

EUR 12.30 bn

Monthly

US

14:00

Net Long-Term TIC Flows (Sep)

Low

USD 20.00 bn

-USD 8.90 bn

Monthly

US

14:00

Total Net TIC Flows (Sep)

Low

-

-USD 2.90 bn

Monthly

Eurozone

14:30

ECB's Nowotny Speaks in Vienna

Low

-

-

-

US

15:00

NAHB Housing Market Index (Nov)

Low

55.00

55.00

Monthly

US

17:15

Fed's Dudley to Speak in Queens, New York

Low

-

-

-

US

18:30

Fed's Plosser Speaks on the Economic Outlook in Philadelphia

Low

-

-

-

Japan

23:50

Housing Loans (YoY) (Q3)

Low

3.00%*

3.20%

Quarterly

Eurozone

-

Austrian Central Bank Conference on Economic Integration

Low

-

-

-


See today's events updated in real-time in our Financial Calendar on TradingFloor.com

Corporate Calendar

Country

Company Name

Index

Announcement

UK

AVEVA Group Plc

FTSE All Share

Interim

UK

Capita Plc

FTSE All Share

Trading

UK

Diploma Plc

FTSE All Share

Prelim

UK

Mitie Group Plc

FTSE All Share

Interim

UK

Unite Group Plc

FTSE All Share

Trading

US

Tyson Foods Inc.

S&P 500

Q4 Earnings Release

US

Urban Outfitters Inc.

S&P 500

Q3 Earnings Release

 

—Edited by Clare MacCarthy

25 February
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