Article / 23 June 2014 at 6:20 GMT

Market Preview: EU manufacturing and services data on the menu

Saxo Capital Markets UK
United Kingdom

  • Asia markets buoyant on Chinese numbers
  • DAX and CAC to rise on opening
  • BNP USD 8bn settlement with US prosecutors

Forex
Overnight: EUR trading mixed

Currencies Intraday
 







Source: Bloomberg

The EUR is trading mixed against its major counterparts this morning. Later today, market participants are expected to keep a tab on the preliminary manufacturing and services activity data across the Eurozone to gauge the strength of the business environment in the region, especially after data released earlier today showed that manufacturing activity in China expanded in June. Additionally, speeches from several European Central Bank officials will attract market attention. Across the Atlantic, traders will be looking at US manufacturing and housing data due later in the day. Meanwhile, developments in Iraq will continue to hold market attention for cues to risk appetite. At 05:00 GMT, the EUR has advanced marginally against the USD to trade at USD 1.3606 while it has dropped 0.1 percent against the GBP to trade at GBP 0.7986.

The AUD has risen 0.6 percent versus the USD following better-than-expected Chinese factory data for June.


UK Stocks: Likely to open in positive territory
FTSE 100









Source: Bloomberg

The FTSE 100 is expected to open nine points stronger.

Nationwide House Price Index is the key economic indicator scheduled for release today.

Porvair (PORV), Omega Diagnostics Group (ODX), Accumuli (ACM) and City of London Group (CITY) are scheduled to report their results later today.

Media reports indicate that Barclays (BARC) has launched a long-anticipated sale process for its Index, Portfolio and Risk Solutions (IPRS) business, which could fetch around USD 400 million.

Wm Morrison Supermarkets (MRW) has announced that it would slash prices of its 135 basic products. The cuts would be as much as 41 percent, with an average reduction of 14 percent. The company added that these would be permanent price cuts, not promotional, and there would be additional price cuts in future.

LA Fitness has announced that Sports Direct International (SPD) has acquired its fitness centre in Sale, Greater Manchester. Meanwhile, according to Reuters, Sports Direct International is interested in buying about another 30 LA Fitness clubs, with deals for four of those expected to be agreed with landlords in this week.

ASOS (ASC) has stated that it has been forced to suspend orders and temporarily shut down its website after a fire at its warehouse in Barnsley in northern England.


Asia: Trading mostly in the green
Nikkei 225
 








Source: Bloomberg

Asian markets are trading mostly higher this morning, tracking Friday’s gains on Wall Street and after data indicated that Chinese manufacturing activity expanded in June.

In Japan, Olympus (7733) jumped after a broker reiterated its “buy” rating on the company. Construction equipment companies having considerable exposure to China, Hitachi Construction Machinery (6305) and Komatsu (6301), registered gains. On the flipside, Sega Sammy Holdings (6460) retreated following a report that the Japanese government may place a levy on Japanese pinball-machine gaming. At 05:00 GMT, the Nikkei 225 index advanced 4.6 points to trade at 15,354.1.

In South Korea, Dong-A ST Company (170900) rose after announcing that it has gained an approval from the US FDA for antibiotics that target super-bacteria. In Hong Kong, Chow Tai Fook Jewellery Group (1929) added value after the company signed an agreement with Echo Entertainment Group to develop a casino in Brisbane. In China, Industrial Securities (601377) and GF Securities (000776) advanced after China Securities Finance Corporation allowed these companies to lend shares for short-selling. Neusoft (600718) and Leshi Internet Information & Technology (300104) advanced, pacing gains among technology sector stocks.


US Stocks: Futures trading firmer
S&P 500









Source: Bloomberg

At 05:00 GMT, S&P 500 futures are trading 4.5 points in the green.

Key economic indicators scheduled for release today include Markit Manufacturing Purchasing Managers’ Index, Existing Home Sales and Chicago Federal Reserve National Activity Index.

Micron Technology (MU), Progressive Corporation (PGR), Bed Bath & Beyond (BBBY), Sonic Corporation (SONC), Emmis Communications (EMMS) and Tower Group International (TWGP) are scheduled to announce their results today.

In the after-hours trading session on Friday, Cerulean Pharma (CERU), Corium International (CORI) and Spectrum Pharmaceuticals (SPPI) reversed their regular trading session losses and rallied 9.1 percent, 8.6 percent and 7.7 percent, respectively. SCYNEXIS (SCYX), China HGS Real Estate (HGSH) and Globalstar (GSAT) advanced 7.3 percent, 5.8 percent and 4.4 percent, respectively. On the downside, Rexford Industrial Realty (REXR), China Digital TV Holding (STV) and Kandi Technologies Group (KNDI) extended their regular trading session losses and dropped 18.0 percent, 5.7 percent and 4.7 percent, respectively.

On Friday, the S&P 500 index gained 0.2 percent in the regular trading session and closed at a record high for the third consecutive session. CarMax (KMX) soared 16.5 percent after the company reported first-quarter results ahead of market expectations. Peer, AutoNation (AN) jumped 5.2 percent. Health-care sector stocks, Alexion Pharmaceuticals (ALXN), Eli Lilly & Company (LLY), Amgen (AMGN) and Merck & Company (MRK) advanced 3.6 percent, 3.6 percent, 2.7 percent and 1.1 percent, respectively, amid merger activity in the sector. Meanwhile, Alexion Pharmaceuticals’ Soliris drug was granted orphan drug designation by the Food and Drug Administration earlier last week. Family Dollar Stores (FDO) rose 0.9 percent. The billionaire activist investor, Carl Icahn, increased pressure on the company to put itself up for sale and threatened to replace the company’s board. On the downside, Darden Restaurants (DRI) dropped 3.9 percent as a continued slump in its sales at Oliver Garden restaurant led the company to post lower-than-expected fourth-quarter profit and revenue. Downbeat fourth-quarter results led Oracle (ORCL) to decline four percent. AbbVie (ABBV) lost 1.6 percent after Shire rejected a takeover offer from the company.


Europe Stocks: Expected to open higher
EU Stoxx 50









Source: Bloomberg

The DAX and the CAC are likely to open 17 points and six points in positive territory, respectively.

Key economic indicators scheduled for release today include Eurozone, German and French Markit Manufacturing and Services Purchasing Managers’ Index (PMI), Eurozone Markit Composite PMI and Swiss M3 Money Supply.

No corporates are scheduled to report their results today.

The board of directors of Alstom SA (ALO) have unanimously approved an improved takeover bid from General Electric to acquire its energy business. Later, the French Government won an option to buy 20 percent stake of Alstom SA from Bouygues SA (EN), a condition required for General Electric’s bid to be cleared.

Peter Brabeck, the chairman of Nestle SA (NESN), in an interview to Austrian newspaper, Kurier, has stated that the company aims to double its direct commodities suppliers to keep a hold on quality and supply chains.

The Wall Street Journal has reported that BNP Paribas SA (BNP) is nearing a settlement deal with US prosecutors in which the bank would pay USD 8-9 billion for charges that the bank breached US sanctions against Iran, Sudan and Cuba between 2002 and 2009.

Vivendi SA (VIV) has announced that it has signed a definitive agreement to sell its SFR unit to Numericable Group SA (NUM) and Numericable’s parent company, Altice SA (ATC).


Macro Update

Manufacturing activity in Japan expands

The Markit/JMMA manufacturing Purchasing Managers’ Index (PMI) in Japan has advanced to a reading of 51.1 in June from a reading of 49.9 reported in the previous month.

China’s manufacturing PMI rises more than expected

The HSBC/Markit manufacturing PMI in China has risen more than anticipated to a reading of 50.8 in June from a reading of 49.4 posted in the preceding month.

New Zealand’s credit card spending rebounds

On a seasonally adjusted monthly basis, credit card spending in New Zealand has increased three percent in May compared to a revised drop of three percent recorded in the preceding month.


Economic Calendar


Country

GMT

Economic Indicator

Relevance

Consensus/*Actual

Previous

Frequency

Japan

01:35

Nomura/ JMMA Manufacturing PMI (Jun) (P)

Medium

51.10*

49.90

Monthly

China

01:45

HSBC Manufacturing PMI (Jun) (P)

Medium

50.80*

49.40

Monthly

Japan

05:00

Supermarket Sales (YoY) (May)

Low

-2.20%*

-5.40%

Monthly

Japan

06:00

BOJ Governor Kuroda Speaks in Tokyo

Medium

-

-

-

Switzerland

07:00

M3 Money Supply (YoY) (May)

Low

-

8.00%

Monthly

France

07:00

Markit Manufacturing PMI (Jun) (P)

Low

49.50

49.60

Monthly

France

07:00

Markit Services PMI (Jun) (P)

Low

49.40

49.10

Monthly

Eurozone

07:00

ECB's Constancio Speaks in Frankfurt

Low

-

-

-

Germany

07:30

Markit Services PMI (Jun) (P)

Medium

55.80

56.00

Monthly

Germany

07:30

Markit Manufacturing PMI (Jun) (P)

Medium

52.50

52.30

Monthly

Eurozone

08:00

Markit Manufacturing PMI (Jun) (P)

High

52.20

52.20

Monthly

Eurozone

08:00

Markit Composite PMI (Jun) (P)

High

53.40

53.50

Monthly

Eurozone

08:00

Markit Services PMI (Jun) (P)

High

53.30

53.20

Monthly

Eurozone

08:25

ECB's Nouy Speaks in Dublin

Low

-

-

-

UK

08:30

BoE Credit Conditions Survey

Low

-

-

-

Eurozone

12:00

ECB's Mersch Speaks in Sopot, Poland

Low

-

-

-

US

12:30

Chicago Fed National Activity Index (May)

Low

0.20

-0.32

Monthly

US

13:45

Markit Manufacturing PMI (Jun) (P)

Medium

56.00

56.40

Monthly

US

14:00

Existing Home Sales (MoM) (May)

Low

1.90%

1.30%

Monthly

US

14:00

Existing Home Sales (May)

Low

4.74 mn

4.65 mn

Monthly

Eurozone

15:30

ECB's Nowotny Gives Keynote Lecture at Vienna Event

Low

-

-

-

UK

-

Nationwide House Prices n.s.a. (YoY) (Jun)

Medium

11.20%

11.10%

Monthly

UK

-

Nationwide House Prices s.a. (MoM) (Jun)

Low

0.50%

0.70%

Monthly


Corporate Calendar


Country

Company Name

Index

Announcement

UK

Porvair Plc

FTSE All Share

Interim

US

Bed Bath & Beyond Inc.

S&P 500

Q1 Earnings Release

US

Micron Technology Inc.

S&P 500

Q3 Earnings Release

US

Progressive Corp.

S&P 500

Q1 Earnings Release


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