US and Europe in bullish mood

MARKET OUTLOOK

- US: US markets had a bullish week, driven by heavy merger and acquisition activity, with a particularly strong race after the Fed left interest rates unchanged at 5.25% and dropped its tightening bias on Wednesday. Except for the semiconductors, which ended flat, all sectors had a positive week led by shares from the energy, telecom services and software. Technically, notwithstanding a slight intermediary correction, the current bounce should continue as daily indicators turned bullish, calling for further advance. The Nasdaq is validating its double bottom pattern.

- EUROPE: European markets strongly sustained their bounce week-on-week, with the AEX index reaching new year highs. All sectors ended in the green, led by the automobile - gaining almost 9%, then basic resources, travel and leisure, construction and materials, insurance, banks and financial services - all gaining more than 5% this week. Technically, notwithstanding a slight initial correction, the bias should remain positive as a double bottom pattern has been seen on almost all European indices.

COMPANY PREVIEW

Walgreen (USD 47.77 ; 3.26% ; WAG ; WAG.N)

Today Walgreen, a drugstore chain, is expected to report its 2Q/Feb results. EPS is seen at $0.61 ($0.53 a year ago) on sales of $13.88bln ($12.16bln). Last week the stock was raised to "overweight" from "neutral" at JPMorgan.

Tiffany and Co (USD 45.5 ; 6.53% ; TIF ; TIF.N)

The same day, Tiffany and Co will announce its 4Q/Jan results. Tiffany and Co operates jewellery and specialty retail stores and manufactures products through its subsidiary corporations. EPS is seen at $1.05 ($0.97 a year ago) on sales of $980m ($858.4m). Bank of America upgraded the stock last week to "buy" from "neutral". Top quality one carat diamonds have been selling around $6,550-6,700 dollars for a few months.

Cairn Energy (GBp 1636.92 ; 1.7% ; CNE ; CNE.L)

On Tuesday, Cairn Energy is expected to announce FY sales up 26.9% to appx. $333m and net income of around $50m ($79m a year ago). The Co returned to shareholders yesterday 300p (333.33p gross) per share and did a 13 for 16 share consolidation. Stock rated "equal weight" at Morgan Stanley. Legal and General said last Wednesday it owned 6% of the Co's voting rights.

Hennes and Mauritz (B) (SEK 398.5 ; 3.91% ; HMB ; HMb.ST)

Wednesday, Swedish fashion retailer Hennes & Mauritz (B) is expected to announce FY sales of appx. SEK77.812bln (+13.8% YoY) and net income around SEK12.4-12.6bln (SEK10.8bln a year ago). Last week, competitor Inditex reported FY06 net sales up 22% to E8.196bln and net income up 25% to E1.0bln.

Enel (EUR 7.886 ; -0.32% ; ENEL ; ENEI.MI)

The same day, Enel, Italy's largest utility company, should report FY06 sales of appx. E37.1bln (+15% YoY) and net income around E3.1bln (E3.895m a year ago). The Co and Acciona said last week they were considering a bid for Endesa to compete against E.ON's offer. They both own 46% of Endesa.