Monday, 20 April 2009 14:40:37 GMT
Written by John Rivera, Analyst
U.K., German and U.S. equity markets have full week of event risk ahead as U.K. GDP, German IFO and several blue chip earnings report will cross the wires. U.K. employment figures, EZ PMI, German Zew and U.S. existing home sales are also on tap which could provide some insight as to whether the slew of government stimulus is beginning to help stem the current global recession.
Monday April 20th
Monday will be light on fundamental indicators that have market moving potential with the Australian producer price index and Japanese supermarket sales as the most likely. The focus will be on corporate earnings with Eli Lily and Halliburton reporting with the drug maker expected to report an increase in earnings from a year ago to $0.99 per share from $0.92 while the energy related giant is forecasted to show a drop from $0.66 to $0.41. Neither result will change the outlook for traders as they would expect the defensive health care industry to fare better than the cyclical energy sector. After the bell IBM is due to release their earnings with the computer blue chip expected to show a slight increase to $1.66 per share from $1.65.
Tuesday April 21st
The economic docket will pack a bigger punch on Tuesday with U.K. CPI and the German Zew Survey on tap. Inflation in the U.K. is expected to fall to 2.9% from 3.2% which would support the BoEs forecast that it will undershoot its 2% target. This could raise deflation concerns and lower profit outlooks which could be a weighing factor on the FTSE. The U.K. index will also see Associated British Foods and Tesco PLC report earnings. Meanwhile, the German business sentiment survey is forecasted to rise to 2.0 from -3.5, which would be the first time in positive territory since July, 2007. This could give a boost to the DAX as it is a gauge of future activity and holds a strong correlation to equity markets. On the earnings front Dow components DuPont, Caterpillar, Coca Cola, United Technologies and Merck are all scheduled to report. All are expected to show weaker results from a year ago lead by Caterpillar and DuPont which are expected to show earnings per share fell from a year ago by $1.39 and $0.78 respectively.
Wednesday April 22nd
Wednesday may still be feeling the effects of all the event risk on Tuesday but U.K. employment figures and the BoE policy meeting minute will garner attention. Governor Brown has recently stated that he has done everything in his power which may make the statements from the meeting non-eventful unless they paint a contradictory picture. If they show that the central bank sees considerable downside risk to growth and have reached the end of their capabilities, then we could see risk aversion increase. Additionally, further job looses for the country will dim the domestic growth outlook and could send consumer discretionary names lower. AT&T, Wells Fargo, Pepsi, Apple, Boeing and GlaxoSmithKline PLC dot the earnings calendar.
Thursday April 23rd
Euro-zone PMI manufacturing and Service readings for April are both expected to show slight improvements but remain at concretionary levels. A disappointment in these readings could send European indices lower on the day. E.Z. industrial new orders, U.K. CBI industrial trends and Swiss Zew are other indictors that could spark volatility during the European session. The U.S. session will be one to watch with Existing Home sales on tap. The housing sector has started to show signs of bottoming and another positive report could help spur bullish sentiment. However, forecasts are for demand to have slipped to 4.65M from 4.72M which could have a negative impact. Microsoft and American Express highlight the earnings calendar with the credit card leader expected to show a sharp drop in earnings to $0.13 from $0.84 a year ago, underlying the weak consumer demand that is expected to plague corporate earnings.
Friday April 24th
The week will end with a bang on Friday with U.K. GDP expected to show the economy decline by 1.5% in the first three quarters of 2009. Also, forecasts are calling for U.K. retail to decline for a second month by 0.3%, as consumers continue to be reluctant to open up their wallets. A steep contraction in growth and falling domestic demand could push out expectations for an economic recovery and weigh in the FTSE. Meanwhile, German IFO is expected to slightly improve from its record low of 82.1 to 82.3 which should inspire any optimism. The 1.4% drop in U.S. Durable Goods Orders would erase the 3.4% gain from the month prior and would lead U.S. stock markets lower. 3M, Schlumberger and Xerox wrap a week of earnings with all three expected to show considerable declines in their earnings.