US stocks rebound after mid-term elections

MARKET OUTLOOK

- US: US markets rebounded last week following the results of the mid-term elections. Stocks from the tech. hardware, automobiles and compo. and consumer services sectors gained most, while shares in the health care equipment and pharma. and bio. sectors declined on concern the Democrats will push for legislation to cut drug prices. Oil prices rebounded, sending Exxon Mobil to a new record. Technically we remain cautious, only further gains this week would reverse this cautious stance.

- EUROPE: European markets rose in line with Wall Street. Stocks in the oil and gas, travel and leisure and utilities sectors gained most while, as in the US, stocks in the health care sector were under pressure. Watch CPI data in Germany and Italy this week. On the earnings front, there will be many French stocks reporting their 3Q results. Technically, the major European indices are showing bearish divergence with their relative strength index. This calls for caution and, as for the US, further gains are needed this week to lower the consolidation risk.

COMPANY PREVIEW

Vodafone (GBp 134.5 ; 0.37% ; VOD ; VOD.L)

Vodafone is expected to announce on Tuesday before market its 1H results. Last year, net income reached £2.775bln, pre-tax profit £4.107bln, EBIT £4.477bln and revenue £18.251bln. Last week, the group said that it will begin selling its retail broadband service on January 8 in the UK. The stock was raised to 'neutral' from 'underweight' by JPMorgan on Friday.

Home Depot (USD 36.64 ; -1.51% ; HD ; HD.N)

The same day before the markets open, Home Depot reports its quarterly results. 3Q/Oct EPS is expected at $0.75 ($0.72 a year ago) on a revenue of $23.39bln ($20.77bln). On November 9, the group reduced its EPS guidance for the period to $0.73 from $0.77, due to slower hurricane related product sales and an incrementally weaker housing market. The Co also reduced FY06 EPS guidance to $2.93 ($2.96 expected) from $2.99 and FY07 EPS to $3.18 ($3.19) from $3.36.

BNP Paribas (EUR 86.1 ; 2.5% ; BNP ; BNPP.PA)

Thursday, BNP Paribas reports its 3Q/Oct earnings results. Last year, 3Q net income reached E1.341bln and operating income E1.991bln. Last week, Societe Generale delivered 3Q/Sep net income up 12.36% to E1.272bln and operating income increased 10.05% to E1.915bln.

Hewlett Packard (USD 39.99 ; 4.63% ; HPQ ; HPQ.N)

Hewlett-Packard is expected to announce the same day after market 4Q/Oct EPS of $0.63 ($0.51 a year ago) on a revenue of $24.12bln ($22.91bln). The group should post solid 4Q revenue/EPS results and analysts will concentrate on the Co's services business, PC unit sales, new products, manufacturing efficiency improvements, overall cost containment, sector position and margins.

Dell Computer (USD 24.89 ; 2.68% ; DELL ; DELL.O)

Finally, Dell will deliver its results the same day after market. 3Q/Oct EPS is seen at $0.24 ($0.39 a year ago) on a revenue of $14.43bln ($13.91bln). Solid revenue growth is expected but flat EPS results. The street will review the group's unit sales, new product/model launches, international performance, component costs, customer service improvements and margins. Attention will be paid to the Co's outlook for 2007 with/without the anticipated new operating system from Microsoft, Vista.