Market Outlook May 11th - May 15th

Tuesday, Enel is expected to deliver its 1Q results. Net income could reach E944m vs appx. E1bln a year ago. Last week, the Italy’s largest utility said it may consider acquiring wind-power plants in Chile after having agreed with SoWiTec Group to help developing construction projects there. In addition, the Co to seek market regulator's approval for a planned capital increase. Technically, the stock stands well above a key support around 4.1. Hence, a further bounce is expected to 4.5 and 4.75 in extension.

Wednesday, UniCredit is scheduled to release its 1Q results. The Co may report a quarterly profit of appx. E400m vs around E1bln a year earlier. Recently, the stock price target was raised to E2.37 from E1.9 at JPMorgan. Technically, the stock has broken above its major resistance at 2 and may accelerate on the upside towards 2.4 in the coming days.

The same day, Telefonica may announce 1Q net income of E1.6bln vs E1.54bln a year earlier on sales of E13.8bln almost in line with 1Q08. Recently, the Co was said to consider bidding for Telecom Italia’s German broadband unit Hansenet. Furthermore, the stock price target was cut to E19 from E19.5 at JPMorgan. Technically, the shares rebounded last week but remain capped by a medium-term resistance around 15.5 since last January. Hence, a test of it should be in sight before any further upsides.

On Thursday in the US, Wal-Mart could report 1Q EPS of $0.76 in line with last year on sales of $96.4bln vs $95.3bln, before the market opens. A few days ago, the world's largest retailer posted sales from US stores open at least a year in April up 5%, excluding gasoline sales, topping a 3% rise expected by analysts. Technically, the stock is still under pressure below a declining trend line since last September. Hence, we expect a short-term consolidation before a further pullback to test its 47.5 support.

On the same day, Richemont is expected to unveil FY net income of E826m vs E1.57bln a year ago on sales of E5.3bln in line with 2008. Recently, the Co was removed from Goldman Sachs' "conviction buy" list ("buy" rating unchanged). From a technical view, the stock escaped on the upside from a former horizontal resistance at 22.4 last week. Therefore, a further upside move is expected towards 25.