Market Outlook - 29th August - 2nd September

Market Outlook

- WALL STREET:
US indices finished higher, snapping a four-week losing streak. On the economic front, Bernanke said that "The Fed has a range of tools that could be used to provide additional monetary stimulus" and announced that the Fed had decided to expand its September meeting to two days - Sept. 20 and 21 - to review the pros and cons of further easing. 2Q GDP rose at a 1.0% annual rate (+1.1% expected). Regarding US stocks, Bank of America announced an agreement to sell preferred stock to Berkshire Hathaway in a private offering, raising $5B. Apple announced the resignation of CEO Steve Jobs and his succession by COO Tim Cook. All sectors ended in positive territory. Consumer durables, diversified financials and commercial and professional services recorded the best performance, gaining over 7%. From a technical view, the S&P500 is expected to post a limited rebound to challenge the key resistance at 1200 before a new pullback towards 1100.

- EUROPE:
In the UK, the FTSE 100 fell 5.25% last week. Technically, the index is still under presurre below its bearish 20D MA. Even though a technical rebound cannot be ruled out, its extent should be limited. Looking at economic releases, UK GDP was up 0.2% in the second quarter in final estimation, as expected, vs +0.5% in 1Q. Nationwide consumer confidence index advanced to 49 in July vs 51 in June and 45 expected. In Europe, the CAC 40 and the DAX gained 2.34% and 1.05% respectively, while the SMI added 4.5%. Also, the euro-zone, PMI composite was flat at 51.1 in August (50 expected). Most sectors finished higher last week. Automobiles and parts, industrial goods and services, technology and financial services rose more than 2.5% while banks, insurance and retail closed lower last week. From a chartist view, the Stoxx 600 index is challenging its key support at 220. The risk is a slide below this threshold, which should call for further decline to 215 and 195 in extension.

  August 29th - September 2nd

 Market Round up

 Foreign Exchange

Euro/dollar : the pair has rebounded on its support and is challenging its declining trend line. LONG above 1.395 towards 1.4700 & 1.4900.

Dollar/yen : the pair remains under pressure and is challenging its previous low. SHORT below 79.5 with 75.3 or even 73.75 in sight.

Company preview

 Bouygues (EUR 22.21 ; 2.3% ; EN ; BOUY.PA)
On Tuesday, Bouygues is expected to post 1H net income of E376M compared to E532M a year earlier on sales of around E15B vs E14.7B. Earlier, the Co signed a $68M contract to construct a high-voltage power line in northern Gabon. Recently, the Co's price target was cut to E34 from E40 at Exane BNP Paribas (the "outperform" rating unchanged). From a technical view, the stock remains capped by its declining 20D MA, and should post a ST consolidation before further downsides towards 20.

 L'Oréal (EUR 77.36 ; -0.86% ; OR ; OREP.PA)
The same day, L'Oréal may deliver 1H net profit of E1.5B compared to E1.3B a year ago on sales of E10.1B vs appx. E9.7B. Last week, the Co's Executive committee appointed Geoff Skingsley as Managing Director, Africa, Middle East Zone. Early this month, the Co was added to Goldman Sachs' "conviction buy" list. Technically, the stock price holds above its key support at E75.50. Hence, a technical rebound is highly expected to E80 in the forthcoming days before any decisive moves.

 Carrefour (EUR 18.375 ; -0.6% ; CA ; CARR.PA)
On Wednesday, Carrefour, the French retail giant, is expected to unveil 1H net income of E260M compared with E82M a year ago on sales of E40.2B vs E43.3B. Recently, earlier, Wal-Mart Stores was said to be seeking again to acquire the Co's Brazilian unit according to WSJ. Besides, the stock price target was cut to E22 from E25 at Jefferies (the "hold" rating unchanged). Graphically, the share price is still on the downside, but the RSI is posting bullish divergence, calling for a technical rebound in sight.

 Hays (GBp 72.4 ; 2.33% ; HAS ; HAYS.L)
Thursday, Hays Plc, the UK specialist of recruitment and human resource services, could announce FY profit before tax of around £105M, compared with £30M a year ago on revenues of £3.1B vs £2.7B. Early this month, the Co was upgraded to "neutral" from "underweight" at HSBC, and was also raised to "buy" from "neutral" at UBS. From a chartist point of view, the stock remains capped by its bearish 20D MA since early July 2011, and may re-test it before new weaknesses to 65p.

 Campbell Soup (USD 30.92 ; 2.96% ; CPB ; CPB.N)
On Friday, in the US, Campbell Soup, the food producer, may report 4Q adjusted EPS of around $0.38 compared with $0.33 last year on sales of $1.57B vs $1.52B. Earlier, the USDA forecasts 3.5%-4.5% inflation for food-at-home in 2011, triple the 1.3% expected for core inflation. From a technical view, the stock currently consolidates above the $30 support, and should post a limited technical rebound at first before any further decline to $28.5.

Selection of those events which may affect the stock prices of international Large Caps

Corporate Calendar August 29th - September 2nd

Economic Calendar (CET) August 29th - September 2nd