Download Week Ahead: US Earnings and Abe Election Win Bolster Optimism

22 Jul 2013
Week Ahead: US Earnings and Abe Election
Win Bolster Optimism
The week ahead in business and finance
US – Existing and new home sales (Mon and Wed, respectively) and FHFA house prices (Tue) will be
watched closely; all three data releases are expected to record positive trends. Housing data
continues to attract attention in the US because improvements in the US housing sector trickle down
positively to other parts of the US economy, helping to increase overall employment and boost
consumer confidence and spending.
Europe – This week should give a good indication about any signs of a more positive outlook for the
sluggish European economy. PMI data will be released on Wednesday for Germany, France and the
EU17 countries in the eurozone. There will be strong interest in the data as it could show signs of
growth across manufacturing and services in the region. In particular, Germany’s PMI readings have
been closely monitored by markets recently for any evidence that the weakness in the eurozone’s
periphery might be feeding into the leading European economies. But PMI readings for Germany,
France and the EU17 are expected to improve. The IFO Business Climate Index (Thu) will also be
widely observed for further signs of Germany leading a European recovery. In the UK, the preliminary estimate of Q2 GDP will come out on Thursday. Asia – HSBC’s Chinese ‘flash’ manufacturing PMI July data will also be released this week (Wed). After June’s nine‐month low of 48.2, a slight increase to 48.5 is expected for July. The market will scrutinise the data for signs of how much China’s slowing growth is likely to unfold in the coming months. Likewise, the markets will be looking for clues about when the Chinese government might step in to address the slowdown. In Japan, Abe’s Liberal Democratic Party and its coalition partner won the country's upper house elections on Sunday (21 July) . The ruling Liberal Democratic Party has an overwhelming majority in the Lower House, and a majority in the upper chamber of the Diet would strengthen Prime Minister Shinzo Abe's position and his stimulus plans. FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
Summary of key economic events
22 July
23 July
24 July
25 July
26 July
Hong Kong
CPI
US
Existing home sales
UK
BBA mortgage approvals
EU
Consumer confidence
US
FHFA house price index
Australia
CPI
China
HSBC manufacturing PMI ‘flash’ estimate
EU
Composite PMI ‘flash’ estimate
US
Manufacturing PMI ‘flash’ estimate
US
New home sales
South Korea
GDP
UK
GDP
Germany
IFO business climate index
US
Weekly jobless claims
US
Durable goods
Japan
CPI
US
July consumer sentiment
Source: Bloomberg
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
Performance of major stock market indices
End
Index
2013
Daily
2012
18 Jul
19 Jul
Change
Percent Change
Daily
2013
Yr/Yr
North America
United States
Canada
Dow
13104.1
15548.54
15543.74
-4.8
0.0
18.6
21.2
NASDAQ
3019.5
3611.28
3587.61
-23.7
-0.7
18.8
22.6
S&P 500
1426.2
1689.37
1692.09
2.7
0.2
18.6
24.2
12433.5
12628.85
12685.13
56.3
0.4
2.0
9.1
S&P/TSX Comp
Europe
UK
FTSE 100
5897.8
6634.4
6630.7
-3.7
-0.1
12.4
17.3
France
CAC
3641.1
3927.8
3925.3
-2.5
-0.1
7.8
22.9
Germany
XETRA DAX
7612.4
8337.1
8331.6
-5.5
-0.1
9.4
25.7
Italy
MIB
16273.4
16053.6
16124.4
70.8
0.4
-0.9
23.4
Spain
Ibex 35
8167.5
7957.3
7943.2
-14.1
-0.2
-2.7
27.2
Sweden
OMX Stockholm 30
1104.7
1217.6
1221.2
3.6
0.3
10.5
17.2
Switzerland
SMI
6822.4
7929.0
7928.1
-0.9
0.0
16.2
26.1
Asia/Pacific
Australia
All Ordinaries
4664.6
4976.9
4959.4
-17.5
-0.4
6.3
17.2
Japan
Nikkei 225
10395.2
14808.5
14589.9
-218.6
-1.5
40.4
68.3
Hong Kong
Hang Seng
22656.9
21345.2
21362.4
17.2
0.1
-5.7
8.8
S. Korea
Kospi
1997.1
1875.5
1871.4
-4.1
-0.2
-6.3
2.7
Singapore
STI
3167.1
3218.2
3213.3
-4.9
-0.2
1.5
6.6
China
Shanghai Comp
2269.1
2023.4
1992.7
-30.8
-1.5
-12.2
-8.1
India
Sensex 30
19426.7
20128.4
20149.9
21.4
0.1
3.7
17.4
Data Source — Haver Analytics
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
US markets
Disappointing results from Microsoft and Google dragged down both the Dow Jones industrials
and Nasdaq Friday. But stronger than expected results from General Electric and Schlumberger
helped the S&P to offset the technology losses and to post a fourth week of gains. Friday's mixed
performance followed strength earlier in the week. The market had been helped by some upbeat
economic statistics and comments from Federal Reserve Chairman Ben Bernanke, who detailed
Fed policy to lawmakers in appearances before Congress on Wednesday and Thursday. The Dow
was virtually unchanged (down 4.8 points), the Nasdaq lost 0.7% and the S&P added 0.2%. On
the week, the Dow was up 0.5%, the S&P gained 0.7% and the Nasdaq retreated 0.3%.
Advanced Micro Devices was down after the company said gross margins would fall even though
the chipmaker forecast stronger than expected revenue growth in the third quarter. General
Electric and Schlumberger gained on the day. Whirlpool was up after raising its full year outlook.
Intuitive Surgical retreated after the company cut its 2013 sales forecast and said US regulators
had issued a warning after an inspection of its facilities. Google dropped as mobile advertising
crimped average prices. Microsoft plunged after missing projections by the biggest margin in at
least a decade as demand weakens for personal computers running Windows.
Gold at the afternoon London fixing was up US$12.50 to US$1,295.75. Copper futures were up
0.5% to US$3.15. WTI spot crude was up 43 US cents to US$108.47. Dated Brent spot crude
was down 27 US cents to US$108.43.The US dollar was down against all its major counterparts
including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar
Index was down 0.2%. The yield on US Treasury 30-year bond was down 7 basis points to
3.56% while the yield on the 10-year note declined by 6 basis points to 2.48%.
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
European markets
Shares ended the week mostly lower thanks to a weak performance by technology stocks.
Technology stocks were affected by the disappointing financial results reported by Google and
Microsoft late Thursday. However, investors took solace in the comments made by Fed Chairman
Ben Bernanke earlier in the week while testifying before Congress. The FTSE, CAC and DAX all
slipped 0.1% Friday while the SMI was virtually unchanged. For the week, the FTSE gained 1.3%,
the CAC advanced 1.8% and the DAX was up 1.4%. However, the SMI lost 0.7%.
The European Central Bank tweaked its collateral rules, expanding the list of collateral accepted
and reducing the haircuts applicable to asset backed securities in an effort to boost lending to
struggling small businesses. According to the ECB, the measures will have an overall neutral
effect on the amount of collateral available. They were announced by the Governing Council late
Thursday in a biennial review of its risk control framework. The ECB decided to reduce the haircut
applicable to asset backed securities eligible under the permanent and temporary Eurosystem
collateral framework to 10% from 16%.
SAP extended its losses from the prior session after the company reduced its revenue forecast.
Vivendi advanced — according to reports, the company declined an US$8.5 billion offer for its
Universal Music Group division from Japanese telecom company SoftBank. Remy Cointreau
declined on a broker downgrade. Vodafone finished higher after reporting its quarterly sales
numbers. HSBC dropped on a broker downgrade as did TUI Travel. BHP Billiton and Rio Tinto
Group climbed after the companies each reported an increase in iron ore output. Carrefour
jumped as sales in the French retailer’s home market stabilized. Banco Popolare and Royal Bank
of Scotland Group led a rally in financial shares. Electrolux advanced in Stockholm after the
company raised its forecast for the US. The London Stock Exchange Group jumped as the
operator of Europe’s oldest independent bourse reported a 39% increase in first quarter revenue.
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.