Market Outlook August 31st - Sept 4th

Market Outlook

- US : The S&P500 continued to trade higher, about 0.3%, on optimism about the pace of the economic recovery. Shares in the semiconductors, insurance and cons. durables sectors outpaced the S&P's gain by more than 2pt on average. The auto sector continued to decline while the food and beverage sector took the weakest spot for the week with a 1.5% decline. From a technical point of view, the trend remains on the upside for now with no reversal signs in sight. However the September month has been historically weak for equity markets which calls for caution. The VIX index remains stable but a rise above 27 may confirm a consolidation.

- EUROPE : In Europe, the main indices posted even stronger gains than in the US in a repeat of the previous week, lead this time by gains in the technology, banks (better than expected earnings) and insurance sectors. The retail and auto sector fell more than 1% this week. From a technical point of view, the outlook remains equally positive with no signs of weakness. In Asia, the Shanghai SE Composite index fell more than 3%.

August 31st - September 4th

Market Round up

 Foreign Exchange

Euro/dollar : The pair is on the upside and is challenging its resistance, the RSI is mixed to bullish. LONG above 1.3750 towards 1.4460 & 1.4750.

Dollar/yen : The pair is on the downside and is challenging its support, the RSI is badly directed. SHORT @ 97.00 with 93.50 or even 91 in sight.

Company preview

 Vivendi (EUR 19.775 ; 4.85% ; VIV ; VIV.PA)
On Tuesday, Vivendi could release a 2Q net income of appx. E670m on revenue of E6.7bln. Last week, the Co was downgraded to "hold" from "buy" at Deutsche Bank and last month, the Co halted talks about a possible purchase of a majority stake in Zain's African telecommunications assets. Technically, the stock rebounded strongly in the latest trading days and should continue to E20 and E20.66 to fill the down gap left on May 12. Only the penetration of the E18 support would reinstate the stock in a downward trend.

 Brown Forman (B) (USD 44.91 ; 0.31% ; BF/B ; BFb.N)
Wednesday, Brown Forman, the US alcoholic beverage producer, is expected to report 1Q EPS of $0.63 compared to $0.69 on sales of $720m vs $614m a year ago. Earlier, the Co was downgraded to "underweight" from "neutral" at HSBC. From a technical point of view, the stock is still supported by a rising trend line passing through $43 and should test a key resistance level at $45.5 at first before further advance to $47.3 and $48.6 in extension.

 Pernod-Ricard (EUR 53.74 ; 1.66% ; RI ; PERP.PA)
Thursday, Pernod-Ricard may announce FY net income of E990m compared to E840m a year ago on sales of around E7.2bln vs E6.6bln. Recently, the Co said it sold Tia Maria coffee liqueur to Illva Saronno for E125m. The sale of Tia Maria together with other disposals enabled the Co to continue its debt reduction program having achieved disposals totalling in excess of E700m. Technically, the stock bounced off from a medium-term horizontal level's support around E51.5. As long as this level holds on the downside, a further bounce is expected towards E56.8 and E59.2.

 Hays (GBp 103.9 ; -1.89% ; HAS ; HAYS.L)
On the same day, Hays, the UK specialist of recruitment and human resource services, is expected to unveil FY pre-tax profit of appx. 150m compared to 188m a year earlier on sales of 2.24bln vs 2.54bln. Last week, the Co's stock price target was raised to 110p from 80p at UBS. Technically, the stock stands well above the 99p threshold, backed by an ascending 20D MA. Therefore, the stock is expected to challenge its 110p before an attempt to 116.5p.

 Ciena (USD 13.62 ; 1.41% ; CIEN ; CIEN.O)
The same day in the US, Ciena, a network specialist, could deliver a 3Q LPS of $0.13 compared to EPS of $0.23 a year ago on sales of $155m vs $253.2m. A week ago, the Co and AXIANS announced a joint project about developing a resilient network solution for QSCs microwave network based on Ciena's Carrier Ethernet Service Delivery portfolio. Technically, the stock remains positively oriented above its 20D MA and its pivot at $12. Expect a test of its nearest resistance at $14.2 before further upsides towards $16.

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

Corporate Calendar August 31st - September 4th

Economic Calendar (CET) August 31st - September 4th