M&A activity boosts US stocks

MARKET OUTLOOK

- US: US markets had another positive week, driven by better than expected results from M and A activity. The S&P 500 index rose 1.4% to 1,536.3 showing the best weekly performance since the end of April. The Dow average increased 1.2% to 13,668.1, while the Nasdaq Composite Index was up 2.2% to 2,613.9. Shares from real estate, transportation and telecommunication services led the advance week-on-week, while stocks from automobile and banks lost ground. Technically, the bias should remain to the upside for this coming week as indicators are turning bullish.

- EUROPE: European markets had a flat week due to some takeover speculation coming from the utility and telecommunication sectors. Stocks from the basic resources, automobile and utility sectors had a sharp rise week-on-week while shares from oil and gas were among the worst performers. Technically, almost all European indexes have bypassed their last resistance area and the bias should remain positive for this coming week.

COMPANY PREVIEW

United Utilities (GBp 769 ; -0.45% ; UU/ ; UU.L)

On Tuesday, United Utilities will deliver FY07 net income of £407.5m (£207.9m last year). Last week, the Co announced that it intended to pursue a delisting from the NYSE to reduce compliance costs. In the beginning of May, the group was divided into two separate business units: "asset ownership" and "asset operatorship" (Sunday Telegraph).

Brown Forman (B) (USD 67.85 ; 1.19% ; BF/B ; BFb.N)

In the US, Brown Forman is expected to post 4Q EPS of $0.53 ($0.63 last year) on sales $659.8m ($594.3m). The Co has recently agreed to buy the Mexican rights of Don Eduardo tequila from the Orendain family to produce it at facilities that make other brands of the liquor. Moreover, the Co ended two joint ventures for tequila with the Orendain family and sought to acquire the remaining portion of the Don Eduardo brand from the Co (Louisville).

Bouygues (EUR 65.8 ; 1.09% ; EN ; BOUY.PA)

Bouygues may publish 1Q net income of E168m (E148m last year) on revenue of E5.75bln (E5.22bln) on Wednesday. At the end of May, Bouygues Travaux Publics announced its plans to build a harbour quay in Morocco for $200m. The group also reported that its programme launched in December 2006 to organise a new employee capital increase created 6.4m shares worth E232m.

ADC Telecommunications (USD 16.78 ; -2.5% ; ADCT ; ADCT.O)

On the same day, ADC Telecommunications is seen reporting 2Q EPS of $0.22 ($0.29 last year) on sales of $327.2m ($365.6m).In March, the group signed a long-term global wireless technology agreement, under which it will market E-Band's new generation product and develop additional wireless solutions based on its core technology.

National Semiconductor (USD 26.69 ; 4.14% ; NSM ; NSM.N)

Finally, National Semiconductors may release 4Q EPS of $0.23 ($0.42 last year) on sales of $452.1m ($572.6m). In the beginning of May, Relational Investors bought 3.95m of Co's shares at prices ranging from $26.51 to $27.32 that increased Relational's stake in the Co to 38m shares (up 12.4%).