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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.