Article / 23 December 2013 at 7:01 GMT

Market Preview: IMF optimism on US economy boosts 2014 hopes

Saxo Capital Markets UK
United Kingdom

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

The USD is trading lower against most of the major currencies this morning. With markets still contemplating the US Federal Reserve’s tapering move last week, the International Monetary Fund has indicated that the US economy is poised to expand at a faster-than-expected pace next year, thereby affirming that the world’s largest economy is on a firmer footing. Against this backdrop, a slew of economic releases in the US due later today will attract market attention. Investors will eye the final reading of the Reuters/Michigan consumer confidence index which is expected to show an uptick for December. The personal consumption expenditure data will also be tapped for further cues. At 06:00 GMT, the GBP and the EUR had risen 0.2 percent and 0.1 percent versus the USD to trade at USD 1.6347 and USD 1.3679, respectively.

The JPY had advanced 0.1 percent versus the USD while it was trading flat against the EUR.

UK Stocks: Expected to open higher
FTSE 100
Source: Bloomberg

The FTSE 100 is likely to open nine points in the green.

No key economic indicators and corporate releases are scheduled for today.

The Sunday Times has reported that Royal Bank of Scotland (RBS) is considering raising base salaries for some of its highest paid investment bankers in order to dodge new European Union curbs aimed at capping employee bonuses.

The Mail has reported that Marks & Spencer (MKS) is planning to open a store in central Sydney in Australia next year, marking the apparel chain’s first foray into the continent.

The Sunday Times has reported that Premier Foods (PFD) might launch a rights issue worth GBP 300 million early next year as a part of a radical financial restructuring plan.

Asia: Trading in the green
Nikkei 225
Source: Bloomberg

Asian markets are trading firmer this morning tracking Friday’s gains on Wall Street.

Markets in Japan are closed today on account of a holiday.

In Hong Kong, China Mobile (941) has added value after the company signed an agreement with Apple to sell iPhones across China from the next month. FIH Mobile (2038) has advanced following news that it might partner with BlackBerry to develop phones for India and other high-growth markets. On the other hand, Prada SpA (1913) has slumped following downbeat third-quarter net income and after it warned that it might post a lower-than-expected full-year revenue. In South Korea, Hyundai Merchant Marine Company (011200) and Hyundai Elevator (017800) have soared after Hyundai Group stated that it plans to sell assets including financial units and its hotel business for around KRW 3.3 trillion. In China, Industrial & Commercial Bank of China (601398), CITIC Securities (600030) and Haitong Securities (600837) have registered gains.

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

At 06:00 GMT, S&P 500 futures were trading 5.7 points stronger.

Key economic indicators slated for release today include Reuters/Michigan Consumer Sentiment Index, Personal Income and Spending, Personal Consumption Expenditure and Chicago Federal Reserve’s National Activity Index.

Stewart Enterprises (STEI), CalAmp Corporation (CAMP) and Ennis Inc. (EBF) are scheduled to report their results later today.

Archer Daniels Midland (ADM) closed mostly flat in the after-hours trading session on Friday. The US Securities and Exchange Commission indicated that the company agreed to pay around USD 54 million in order to settle bribery charges against its subsidiaries in Germany and Ukraine. Hormel Foods (HRL) and Dendreon Corporation (DNDN) reversed their regular session losses and climbed 4.8 percent and 4.5 percent, respectively. On the other hand, Olin Corporation (OLN), Harley-Davidson (HOG) and Seabridge Gold (SA) extended their regular session losses and slipped 7.1 percent, 3.7 percent and 2.9 percent, respectively.

On Friday, the S&P 500 index climbed 0.5 percent in the regular trading session as investors’ sentiment was boosted following an upward revision to the US third-quarter economic growth. Robust third-quarter results and a hike to its full-year guidance led Red Hat (RHT) to rally 14.5 percent. Textron (TXT) jumped 14.5 percent amid reports that the company might soon announce a deal to purchase Beechcraft Corporation for approximately USD 1.4 billion.

Walgreen Company (WAG) added 3.7 percent following a sharp increase in its first-quarter profit. Allergan (AGN) advanced 3.8 percent following upbeat broker comments. On the flip side, NIKE (NKE) declined 1.2 percent after it posted a dismal second-quarter revenue. Oracle Corporation (ORCL) lost 0.6 percent after the company agreed to acquire Responsys Inc. (MKTG) for a consideration of around USD 1.5 billion in cash. CarMax (KMX) tumbled 9.4 percent after its third-quarter profit trailed market consensus. Fastenal Company (FAST) slumped five percent after the company warned that it might post a lower-than-expected fourth-quarter earnings.

Europe Stocks: Likely to open in positive territory
EU Stoxx 50
Source: Bloomberg

The DAX and the CAC are expected to open 31 points and 15 points firmer, respectively.

German Import Price Index, Swiss UBS Consumption Indicator and M3 Money Supply, Italian Consumer Confidence Index and Spanish Producer Price Index are the key economic indicators slated for release today. Markets will also keep an eye on the Swiss Monthly Bulletin due later today.

No major corporate releases are scheduled for today.

Statoil ASA (STL) has announced that it won a licence along with its partners, ConocoPhillips and Nunaoil, to explore for oil in block 6 off northeast Greenland in the Arctic Ocean.

Bouygues SA (EN) and Vinci SA (DG) have jointly indicated that Colas, a unit of Bouygues, has agreed to sell its 16.7 percent stake in Cofiroute, a motorway operator, to Vinci in a deal worth around EUR 700-800 million.

Swatch Group AG (UHR) has indicated that The Netherlands Arbitration Institute has ordered Tiffany & Company to pay the former a compensation of about USD 449 million over a failed joint venture to produce and market watches.

Banco de Sabadell SA (SAB) has indicated that it sold its 15.8 percent stake in Centro Financiero BHD, a Dominican Republic bank, for about USD 156 million, to an undisclosed buyer.

Aareal Bank AG (ARL) has indicated that it would acquire Corealcredit Bank AG from a US-based private equity firm, Lone Star, for about EUR 342 million.

Macro Update
US economy will grow at a faster pace than expected next year, says IMF’s Lagarde
While speaking at NBC’s “Meet the Press” event, Christine Lagarde, the managing director of the International Monetary Fund (IMF), has stated that the US economy is poised to grow at a faster-than-expected pace next year citing a pickup in its domestic economic activity, a budget deal reached by Congress and clear communication from the US Federal Reserve about its plan to wind down its bond buying programme.

Yellen passes Senate vote; final vote pending
Janet Yellen, the current vice chairperson of the US Federal Reserve, has passed a Senate vote with 59-34 to confirm her nomination as the chairperson of the US central bank. A final vote is set for January 6, when the Senate resumes after a holiday break.

New Zealand’s M3 money supply increases
On an annual basis, the M3 money stock in New Zealand has climbed 6.7 percent in November compared to a 6.6 percent rise reported in the previous month.

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/
*Actual

Previous/
**Previous Est.

Frequency

Germany

7:00

Import Price Index (YoY) (Nov)

Low

-3.10%

-3.00%

Monthly

Switzer-
land

7:00

Monthly Statistical Bulletin (Dec)

Medium

-

-

Monthly

Switzer-
land

7:00

UBS Consumption Indicator (Nov)

Medium

-

1.28

Monthly

Switzer-
land

8:00

M3 Money Supply (YoY) (Nov)

Low

-

9.10%

Monthly

Spain

8:00

Producer Price Index (YoY) (Nov)

Low

-

-0.20%

Monthly

Italy

9:00

Consumer Confidence (Dec)

Low

98.80

98.30

Monthly

US

13:30

Personal Consumption Expenditure Deflator (YoY) (Nov)

Low

0.90%

0.70%

Monthly

US

13:30

Personal Consumption Expenditure Core (YoY) (Nov)

Medium

1.20%

1.10%

Monthly

US

13:30

Personal Spending (Nov)

Medium

0.40%

0.30%

Monthly

US

13:30

Chicago Fed National Activity Index (Nov)

Low

-

-0.18

Monthly

US

13:30

Personal Income (MoM) (Nov)

Medium

0.50%

-0.10%

Monthly

Canada

13:30

Gross Domestic Product (YoY) (Oct)

High

-

2.30%

Monthly

US

14:55

Reuters/Michigan Consumer Sentiment Index (Dec) (F)

High

82.60

82.50**

Monthly


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

Corporate Calendar

Country

Company Name

Index

Announcement

No major corporate releases are scheduled for today.

(mo)

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