Market Outlook January 24th - January 28th

Market Outlook

- WALL STREET:
US indices were mixed last week amid a bunch of earnings releases with Apple announcing its 1Q EPS at $6.43 ($5.4 expected) vs $3.67 a year earlier on revenue of $26.74bln ($24.4bln expected) vs $15.68bln in the previous year. On the economic data front, housing starts fell 4.3% to a 529k annual rate (550K expected) in December whereas sales of existing US homes jumped 12.3% (+4.1% expected) in December to a 5.28m annual rate. Also, initial jobless claims fell 37,000 to 404,000 (420K expected) in the week ended January 15th. Regarding sectors, media gained more than 2% and real estate added nearly 1.60%, whereas, automobile and materials lost over 3%. Technically, the S&P 500 is still above its ascending 20D MA and is expected to challenge 1304 after a ST consolidation.

- EUROPE:
In the UK, the FTSE 100 fell below its 20D MA during the last trading week with an appx. 1.8% loss. On the economic data front, UK core CPI rose 2.9% YoY (+2.7% expected) vs +2.7% in November. Jobless Claims also unexpectedly drop 4.1k (flat expected) vs -3.2k in November. In other European news, Germany December PPI rose 0.7% MoM (+0.5% expected) vs +0.2% in November. Moody's will keep close watch on Portugal's exports performance as part of a review of the country's government-bond ratings. In the rest of Europe, the Euro Stoxx 50 was broadly flat, whereas the Ibex gained more than 4% and FTSE MIB increased nearly 3%. Utilities, telecommunications and banks sectors gained the most, whereas, basic resources and automobile ended into negative territory, declining over 4%. Technically, the Stoxx 600 remains above its long-term rising trend line, which should maintain the bullish bias with a first target at 290.

Company preview

Siemens (EUR 92.35 ; 1.41% ; SIE ; SIEGn.DE)
On Tuesday, Siemens is expected to release 1Q net income of E1.53bln compared to E1.48bln a year earlier on revenues of around E18.9bln vs E17.3bln. Earlier, the Co said it's confident of achieving its full-year targets while 1Q 2011 net profit from continuing operations is expected to be significantly higher than in 4Q of the previous year. Recently, the Co planned to add over 2,000 jobs at its renewable-energy unit this year. Technically, the stock remains on the upside, above a MT rising trend line. A re-test of E95 is expected in sight before a further bounce towards E100.

Ericsson (B) (SEK 77.85 ; 1.1% ; ERICB ; ERICb.ST)
The same day, Ericsson could report FY net income of around SK17.2bln compared with SK3.7bln a year ago on revenues of SK200.8bln vs SK206.5bln. Last week, the Co's venture, Sony Ericsson announced 4Q sales of E1.53bln (vs EU1.8bln expected by analysts) with net income of E8m vs a loss of E167m last year. Earlier, the Co received a 3yr contract to upgrade and expand the network used by DNA in Finland to support higher 3G and 4G speeds. Graphically, the price bounced off from its major support around SK75 last week and should test its nearest resistance at SK80 before any further upsides.

Boeing (USD 71.68 ; 2.65% ; BA ; BA.N)
Wednesday, Boeing may deliver 4Q EPS of $1.1 compared with $1.79 for the same period last year on sales of $17bln vs $17.9bln. A week ago, the Co teamed up with Science Applications International to submit a revised proposal for the technology development phase of the US Army's Ground Combat Vehicle program. Recently, Boeing planned to cut 1,100 jobs through end of 2012 and expected delivering 13 C-17s in 2011 vs 14 in 2010. Technically, the stock price is close to its key resistance around $72.50. A ST consolidation cannot be ruled out before a new up leg to $75 and $78.3 in extension.

 AstraZeneca (GBp 2963.5 ; -0.89% ; AZN ; AZN.L)
On Thursday, in the UK, AstraZeneca is expected to post FY pre-tax profit of $11.9bln compared to $7.5bln a year ago on revenues of appx. $33bln vs $32.8bln. Earlier this month, the US FDA extended a review of the Co's vandetanib, an experimental treatment for a rare thyroid cancer, by three months. Recently, the Co was upgraded to "buy" from "hold" at Citigroup. From a technical point of view, the stock is still capped by a declining 50D MA. The risk now is a slide below 2925p, which should open the downside way towards 2800p.

 Microsoft (USD 28.02 ; -0.6% ; MSFT ; MSFT.O)
The same day, Microsoft, the US IT giant, reports its 2Q results. EPS is expected to be $0.68 vs $0.74 last year on sales of $19.1bln, almost in line YoY. Earlier, the Co has entered into an agreement with Logica to offer cloud based solutions to clients, utilising public and private cloud offerings with Microsofts Windows Azure platform, Hyper-V Cloud and Microsoft Office 365. From a chartist view, the stock broke below its 20D MA's support last Friday and is now expected to return to $27.5 at first before any further rises.

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

Corporate Calendar January 24th - January 28th

Economic Calendar (CET) January 24th - January 28th