Article / 11 June 2014 at 6:06 GMT

Market Preview: World Bank lowers global economic growth forecast

Saxo Capital Markets UK
United Kingdom

Forex Overnight: EUR trading lower
Currencies Intraday












Source: Bloomberg

The EUR is trading on a weaker footing against its major peers this morning, extending its downward trajectory post interest rate cuts announced by the European Central Bank (ECB) last week. Market participants also mull over the World Bank’s Global Economic Prospects report, at which the bank trimmed its global economic growth outlook and highlighted concerns about the Ukrainian crisis and the unusually cold weather in the US this past winter. With no major economic data in Eurozone and the US today, investors will track speeches from several prominent ECB policymakers due later in the day. Traders would also keep a tab on today’s UK employment figures to ascertain market direction for the Pound. At 05:00 GMT, the EUR has declined 0.1 percent each against the USD and the GBP to trade at USD 1.3533 and GBP 0.8077, respectively.

The JPY has advanced 0.2 percent and 0.1 percent against the EUR and the USD, respectively.


UK Stocks: Likely to open weaker
FTSE 100












Source: Bloomberg 


The FTSE 100 is expected to open eight to nine points in the red.

ILO Unemployment Rate, Employment Change, Claimant Count Rate and Change, Average Earnings and RICS Housing Price Balance are the key economic indicators scheduled for release today.

Betfair Group (BET), Flybe Group (FLYB), Castings (CGS), Hyder Consulting (HYC), Creston (CRE) and Greka Drilling Limited (GDL) are scheduled to report their results.

The Guardian has reported that Tesco (TSCO) might face potential fines after its analysis revealed that the company has been failing to comply with a UK Competition Commission order for the past four years.

Sky News has reported that a number of big AstraZeneca (AZN) shareholders have requested meetings with John Varley, the chairman of AstraZeneca’s remuneration committee, to discuss a criteria for executives’ long-term share awards.


Asia: Trading mostly in negative territory
Nikkei 225












Source: Bloomberg 


Asian markets are trading mostly lower this morning.

In Japan, Seven & I Holdings Company (3382) traded higher following a report that the company might post robust quarterly operating profit. A broker upgrade led Daiichi Sankyo Company Limited (4568) to advance. On the flipside, Minebea Company Limited (6479), Yaskawa Electric Corporation (6506) and Tokyo Tatemono (8804) declined, featuring amongst the major laggards on the benchmark index. At 05:00 GMT, the Nikkei 225 index advanced 0.3 percent to trade at 15,034.2.

In Hong Kong, Beijing Enterprises Holdings (392) fell after the company revealed plans to raise HKD 4.3 billion by selling exchangeable bonds. On the upside, Sands China Limited (1928) gained following positive broker comments. In China, Datong Coal Industry (601001) and Guizhou Panjiang Refined Coal Company (600395) traded lower. In South Korea, Korean Air Lines (003490) and Hanjin Shipping Company (117930) lost value after the former announced that it would acquire a stake in the latter to become its largest shareholder. However, LG Display (034220) rose on reports that it is in discussions with Panasonic (6752) to supply big-screen television panels.


US Stocks: Futures trading lower
S&P 500
 











Source: Bloomberg 


At 05:00 GMT, S&P 500 futures are trading 1.2 points weaker.

MBA Mortgage Applications is the key economic indicator scheduled for release today. Additionally, traders will keep a tab on the Monthly Budget Statement.

H&R Block (HRB), Restoration Hardware Holdings (RH), Sigma Designs (SIGM) and Medical Action Industries (MDCI) are scheduled to announce their results.

In the after-hours trading session yesterday, Ulta Salon Cosmetics & Fragrance (ULTA) climbed 10.1 percent after the company posted better-than-expected first-quarter results. Synaptics (SYNA) surged 17.8 percent after the company agreed to acquire Renesas SP Drivers for around USD 475 million and raised its fourth-quarter revenue forecast. Sportsman’s Warehouse Holdings (SPWH) gained 2.1 percent after reporting a narrower first-quarter adjusted loss. On the downside, Exelon Corporation (EXC) declined 2.2 percent after the company announced plans to offer 50 million common shares and 20 million equity units. United Natural Foods (UNFI) slid 1.5 percent after the company’s full-year earnings outlook fell short of market estimates. American International Group (AIG) fell marginally following the company’s announcement to appoint Peter D. Hancock as its new chief executive officer and president with effect from September 1, 2014.

Yesterday, the S&P 500 index fell marginally in the regular trading session, snapping its four-day streak of record closings. CR Bard (BCR) slipped 4.7 percent after a broker warned that the US Food and Drug Administration’s pending review of the company’s drug-coated balloon does not guarantee a positive decision. Tyson Foods (TSN) declined 3.8 percent, extending Monday’s losses, after a broker lowered its rating on the stock to “Underperform” from “Neutral”. A broker downgrade also led Cognizant Technology Solutions (CTSH) to tumble 4.7 percent. Urban Outfitters (URBN) declined 3.7 percent after the company stated that its second-quarter same-store sales have remained unchanged. eBay (EBAY) lost 2.7 percent after announcing that David Marcus would resign as the head of its PayPal unit to join Facebook (FB). Facebook, on the other hand, climbed 4.6 percent. Molson Coors Brewing Company (TAP) gained 5.4 percent amid speculation that the brewer might consider purchasing, MillerCoors, its joint venture with SABMiller.


Europe Stocks: Expected to open in the red
EU Stoxx 50












Source: Bloomberg 


The DAX and the CAC are likely to open two to eight points and five points in negative territory, respectively.

No key economic indicators are scheduled for release today.

Inditex SA (ITX) and Clas Ohlson AB (CLASB) are scheduled to report their results later today.

BASF SE (BAS) has announced that it has developed a new herbicide-tolerant rice system, Provisia.

Allianz Ayudhya Assurance, a Thailand-based subsidiary of Allianz SE (ALV), has reported strong first-quarter results, with premiums rising 17 percent and gross written premiums rising 12 percent.

Reuters has reported that the number of European helicopter makers, including Airbus Group NV’s (AIR) Airbus Helicopters and Finmeccanica SpA’s (FNC) AugustaWestland, are competing to grab a deal worth around USD two billion to build transport aircrafts for Japan’s military.

According to a stock exchange notice, Abengoa SA (ABG) is set to replace Ebro Foods SA (EBRO) and join the IBEX 35 index from June 23, 2014.

Remy Cointreau SA (RCO) has appointed the former L’Oreal SA (OR) and LVMH Moet Hennessy Louis Vuitton SA (MC) executive, Valerie Chapoulaud-Floquet, as its new chief executive officer.


Macro Update

World Bank cuts its 2014 global growth forecast

The World Bank has trimmed its 2014 global growth forecast to 2.8 percent from the 3.2 percent growth rate projected in January 2014, citing the geopolitical tensions in Ukraine and the unusually cold winter in the US.

Japan’s domestic CGPI rises more than expected

On an annual basis, the domestic Corporate Goods Price Index (CGPI) in Japan has risen 4.4 percent in May, more than market estimates and compared to a revised 4.2 percent increase posted in the previous month.

Japan’s BSI large manufacturing index falls unexpectedly

On a sequential basis, the Business Survey Index (BSI) of large manufacturing industries in Japan has declined unexpectedly by 13.9 percent in the second quarter of 2014 compared to a rise of 12.5 percent recorded in the previous quarter.

Australia’s Westpac consumer confidence rises

The Westpac consumer confidence index in Australia has advanced to a reading of 93.2 in June from a reading of 92.9 reported in May.

Retail card spending in New Zealand climbs

On a monthly basis, retail credit card spending in New Zealand has increased 1.3 percent in May, more than market expectations and compared to a revised 0.4 percent rise recorded in the previous month.

South Korea’s unemployment rate drops

The unemployment rate in South Korea has declined to 3.6 percent in May from a rate of 3.9 percent posted in April.


Economic Calendar


Country

GMT

Economic Indicator

Relevance

Consensus/*Actual

Previous/ **Previous Est.

Frequency

Eurozone

07:30

ECB's Nowotny Gives Keynote Address in Vienna

Low

-

-

-

Eurozone

08:15

ECB's Mersch Speaks at ABS Conference in Barcelona

Low

-

-

-

UK

08:30

Average Earnings excluding Bonus (3Mo/Yr) (Apr)

Low

1.20%

1.30%

Monthly

UK

08:30

Claimant Count Change (May)

Medium

 -25.00 K

 -25.10 K

Monthly

UK

08:30

Employment Change (3M/3M) (Apr)

Medium

270.00 K

283.00 K

Monthly

UK

08:30

ILO Unemployment Rate (3M) (Apr)

Medium

6.70%

6.80%

Monthly

UK

08:30

Average Earnings including Bonus (3Mo/Yr) (Apr)

Medium

1.20%

1.70%

Monthly

UK

08:30

Claimant Count Rate (May)

Medium

3.20%

3.30%

Monthly

Eurozone

09:00

Bundesbank's Dombret Speaks in London

Low

-

-

-

Germany

09:00

Merkel, Draghi Meet for Talks at Chancellery in Berlin

Low

-

-

-

US

11:00

MBA Mortgage Applications (06-Jun)

Low

-

-3.10%

Weekly

US

18:00

Monthly Budget Statement (May)

Medium

 -USD 130.00 bn

 USD 106.85 bn

Monthly

UK

23:01

RICS Housing Price Balance (May)

Medium

52.00%

54.00%

Monthly

Japan

23:50

Machinery Orders (YoY) (Apr)

Medium

13.30%

16.10%

Monthly

Japan

23:50

Machinery Orders (MoM) (Apr)

Low

-10.80%

19.10%

Monthly

China

-

New Yuan Loans (May)

High

CNY 750.00 bn

CNY 774.70 bn

Monthly

China

-

Aggregate Financing (May)

Low

CNY 1400.00 bn

CNY 1550.00 bn

Monthly

China

-

M2 Money Supply (YoY) (May)

Low

13.10%

13.20%

Monthly

China

-

M1 Money Supply (YoY) (May)

Low

5.70%

5.50%

Monthly

China

-

M0 Money Supply (YoY) (May)

Low

6.00%

5.40%

Monthly

World

-

OPEC meeting

Low

-

-

-


Corporate Calendar


Country

Company Name

Index

Announcement

UK

Betfair Group Plc

FTSE All Share

Final

UK

Flybe Group Plc

FTSE All Share

Final

UK

Hyder Consulting Plc

FTSE All Share

Prelim

UK

J Sainsbury Plc

FTSE All Share

Trading

UK

WH Smith Plc

FTSE All Share

Trading

Spain

Inditex SA

EuroStoxx 50

Q1 Earnings Release

US

H&R Block Inc.

S&P 500

Q4 Earnings Release


Ex-Dividend Calendar


Country

Company Name

Index

Announcement

UK

Johnson Matthey Plc

FTSE 100

Final Ex-Dividend

UK

Vodafone Group Plc

FTSE 100

Final Ex-Dividend



— Edited by Clare MacCarthy

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