Uncertain week ahead for US, European markets

MARKET OUTLOOK

- US: US markets closed higher week-on-week paced by strong 3Q corporate earnings and despite Friday's consolidation. A weaker than expected 3Q GDP growth estimate (+1.6% vs 2.0% expected and the slowest pace since the 1.2% gain record in the 2Q 2003) pushed investors into profit taking mode after the recent strong gains. Stocks from the cons. durables, media and energy sectors helped the market higher, while stocks from the health care equipment and tech. hardware were under pressure. We are cautious for the week ahead.

- EUROPE: European markets followed Wall Street and also closed in the red on Friday. Stocks from the telecommunications, automobiles and parts and travel and leisure sectors closed higher. While shares in the insurance and health care declined. Technically, if the upside momentum should prevail, this week should see some profit taking and pushing European indices towards their rising 20 day moving averages. Watch Thursday's ECB decision, although investors are expecting a status quo at 3.25% a surprise can always happen.

COMPANY PREVIEW

Procter and Gamble (USD 63.56 ; 1.4% ; PG ; PG.N)

On Tuesday, Procter & Gamble is scheduled to release its 1Q/Sep results. EPS is expected to reach $0.78 ($0.77 a year ago) and revenue $18.561bln ($14.793bln). Watch progress of Gillette integration which is expected to dilute earnings for two years but also international performance, overall costs and margins.

UBS (CHF 78.85 ; 0.64% ; UBSN ; UBSN.VX)

UBS will also announce its results on Tuesday. 3Q/Sep EPS is seen at $1.29 ($1.35 a year ago). The stock is up year to date 26.6% versus a 14.6% rise for its benchmark index the SMI and its competitor Credit Suisse with a 14% gain. Technically, although a short term consolidation could shape, above SF73.8 the bias remains to the upside.

Sanofi-Aventis (EUR 68.65 ; -2.21% ; SAN ; SASY.PA)

Sanofi-Aventis will deliver its 3Q/Sep results the same day. The market expects sales to rise by 3% (+4% organic growth), EBIT before one-offs to decline by 8% and EPS to be down 12% (-7% excluding 2005 one-offs), mostly due to the absence of Plavix US income after mid-August. After the launch at risk of generic Plavix by Apotex in August, the group cut its FY adjusted EPS growth guidance to around 2% from around 12%.

Time Warner (USD 19.91 ; 0.66% ; TWX ; TWX.N)

On Wednesday pre-market, Time Warner should report 3Q/Sep EPS of $0.21 ($0.19 a year ago) on a revenue of $11.091bln ($10.538bln). Analysts will evaluate the group's cable subscriptions, Internet dial-up subscriptions, advertising revenue, box office receipts, strategic position and margins.

Qualcomm (USD 37.14 ; -2.06% ; QCOM ; QCOM.O)

Finally, Thursday, Qualcomm will announce its 4Q/Sep results, with expected EPS of $0.41 ($0.34 a year ago) on a revenue of $1.97bln ($1.562bln). On October 20 the US PTO determined that it will re-examine the validity of one of the patents Broadcom (BRCM) has asserted against QCOM in the International Trade Commission.