Michaela notes

Morning News Call - EMEA, Oct 14


MARKET VIEWEuropean shares are set to resume their upward move on Friday and remain on track to post a third straight week of gains, with strong results from Google seen helping technology stocks, while miners are likely to track firmer metals prices.Spreadbetters see Britain’s FTSE 100 opening 0.3 percent higher, Germany’s DAX up 0.5 percent and France’s CAC-40 0.6 percent higher.Google’s results trounced Wall Street expectations with the help of strong advertising sales and deft cost controls, driving its shares roughly 6 percent higher.Asian shares inched down on Friday, tracking New York and European shares lower as weak Chinese trade data raised concerns about the global economy, while the euro eased after another sovereign debt ratings downgrade. Lingering concerns about Europe’s debt woes and Spain’s downgrade underpinned the safety of government bonds.Standard & Poor’s cut Spain’s credit rating on Friday, sending the euro lower and underlining the challenges facing Europe’s big powers as they prepare to meet G20 counterparts over the euro-zone debt crisis. The rating agency, whose move mirrored last week’s downgrade of Spain by Fitch, cited Spain’s high unemployment, tightening credit and high private-sector debt among reasons for cutting the nation’s long-term rating to AA- from AA.China’s consumer price index rose 6.1 percent in September from a year earlier, coming within expectations and lending support to views the central bank will keep interest rates on hold.MSCI’s broadest index of Asia Pacific shares outside Japan eased 0.8 percent, but was set for a weekly gain of about 4.7 percent, which would be the largest weekly increase since late March, when the index ended the week up 4.8 percent.As investors sought relative safety, prices of U.S. Treasury debt added slight gains in Tokyo on Friday, with the benchmark 10-year note up 2/32 to yield 2.1745 percent, compared to 2.1798 percent late in New York on Thursday.The euro edged lower after S&P cut Spain’s ratings, but still remained on track for the biggest weekly rally since January after getting lifted by a flurry of short-covering. The euro was last down 0.2 percent at $1.3754 following Spain’s downgrade. Despite the pullback, the euro was still up 2.7 percent this week, a gain that if maintained through Friday would mark the strongest weekly performance since mid-January. Euro resistance is seen at this week’s one-month peak of $1.3834 on trading platform EBS, a level that roughly matches a 38.2 percent retracement of a fall from around $1.4940 in May to a nine-month low of $1.3145 hit last week. The dollar held steady against the yen at 76.90, having backed down from a one-month high around 77.48 yen struck this week.Brent crude rose above $111 a barrel, heading for a second-straight weekly increase, as investors looked to more data from top oil consumers United States and China for cues on economic health and fuel demand. November Brent crude edged up 14 cents to $111.25 by 0420 GMT, after gaining nearly 5 percent this week, ahead of the contract expiry at the end of Friday. U.S. crude rose 21 cents to $84.44.Gold traded flat but was headed for its biggest weekly gains in more than a month, shrugging off Spain’s downgrade. Spot gold was little changed at $1,665.59 an ounce by 0301 GMT, on course for a rise of 1.7 percent from a week earlier, its biggest weekly rise since early September in the run-up to a record above $1,920. U.S. gold traded flat at $1,667.90 an ounce in thin volume.MARKET SNAPSHOT AT 0515 GMTS&P 500 INDEX FUTURES 1,196.40 down 0.09% down 1.10DJIA FUTURES 11,387.00 down 0.13% down 15.00NIKKEI 8,749.34 down 0.84% down 73.91MSCI ASIA, EX-JP 465.98 down 0.78% down 3.64EURO/USD 1.3764 up 0.07% up 0.0009USD/JPY 76.93 down 0.07% down 0.05SPOT GOLD $1,664.59 down 0.10% down $1.61US CRUDE $84.37 up 0.17% up $0.1410-YR US TSY YLD 2.1816% up 0.002010-YR BUND YLD 2.0960% down 0.0120GLOBAL TOP STORIESStandard & Poor’s cut Spain’s credit rating on Friday, sending the euro lower and underlining the challenges facing Europe’s big powers as they prepare to meet G20 counterparts over the euro-zone debt crisis.G20 finance chiefs and central bank heads from the world’s biggest economies meet in Paris on Friday needing to find a solution to a deepening euro zone debt crisis that has fanned fears of a global recession.China’s consumer inflation dipped to 6.1 percent in September, retreating further from three-year highs, although stubborn food price pressures will deter the central bank from loosening its policy reins anytime soon.Google’s results trounced Wall Street expectations with the help of strong advertising sales and deft cost controls, driving its shares roughly 6 percent higher.JPMorgan’s quarterly earnings fell 25 percent, excluding an accounting gain, as European financial turmoil reduced demand for securities underwriting and acquisition advice.EUROPEAN COMPANY NEWSReports that Sony could take control of Sony Ericsson are likely to overshadow the handset maker’s third-quarter results on Friday, when it is expected to show that a beefed-up smartphone line helped it to make a small profit.Fitch Ratings downgraded UBS on Thursday and placed seven other U.S. and European banks on credit watch negative, citing challenges in the economy and financial markets, as well as the impact of new regulations.Japan’s Suzuki Motor said on Friday it had served Volkswagen with a notice of a breach of contract for not allowing it access to technologies promised as part of their partnership agreement.Anglo-Dutch consumer products maker Unilever is close to buying Russian cosmetics company Kalina for about $850 million, the Wall Street Journal reported, citing people familiar with the matter.Glencore, the world’s biggest commodities trader, is expected to sign a deal within days for a $800-$900 million loan to Indonesia’s Bakrie Group to help it refinance a $1.35 billion facility that became unexpectedly due, sources said on Thursday.TODAY’S COMPANY ANNOUNCEMENTSGermany Codon Q3Luxembourg Luxonen Q3Norway IM Skaugen Q3Portugal Galp Energia Q3 TradeSweden Ortivus Q3Switzerland EMS Chemie Holding Q3Switzerland Sulzer Q3 SalesSwitzerland Syngenta Q3 TradeUnited Kingdom Asos TradingUnited Kingdom Computacenter TradingUnited Kingdom Filtrona TradingUnited Kingdom Record Q2 TradeTODAY’S TOP ECONOMIC EVENTS (all times GMT)G20 finance ministers meeting in Paris (to Oct 15).ECB Governing Council member Erkki Liikanen will give speech at a hearing by Finnish parliament’s economic committee in Helsinki, Finland.0900 - Euro zone trade balance for Aug mm. Forecasts are for a deficit of 4.0 bln euros vs. a 4.3 bln surplus.0900 - Euro zone final inflation for Sept mm, seen at 0.8 pct vs. 0.2 pct. Inflation yy seen at 3.0 pct vs. 2.5 pct.0900 - Italy inflation for Sep mm, seen at 0.1 pct, unchanged. CPI yy seen at 3.1 pct, unchanged.0945 - International Monetary Fund Executive Director Arrigo Sadun gives speech in Bologna, Italy.1230 - United States retail sales for Sept. Seen up 0.7 pct vs. an unchanged reading in Aug. Excluding automobiles, sales are expected to rise 0.3 pct vs. 0.1 pct increase in Aug.1230 - United States import/export prices for Sept. Forecasts are for a 0.3 pct drop in import prices and a 0.2 pct increase in export prices. In Aug, import prices fell 0.4 pct and



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