Loan losses hit US stocks

MARKET OUTLOOK

- US: US markets were under pressure week-on-week due to increasing concerns about loan losses which may hurt banks' and brokerages' profits growth. Shares from energy, materials, semi-conductors and transportation managed to outperform the market, while insurance, media, consumer services and real estate lost ground week-on-week. From a technical point of view, Friday's drop has opened the way to a further correction this coming week; indicators are indeed turning bearish.

- EUROPE: European markets lost ground week-on-week as poor corporate results disappointed investors. All sectors were under pressure, especially shares from personal and household goods, automobile and parts, health care and banks. Technically, the risk should remain to the downside as most of the indicators are now showing some weaknesses.

COMPANY PREVIEW

AT&T (USD 39.06 ; -3.32% ; T ; T.N)

AT&T is scheduled to report 2Q earnings on Tuesday. 2Q EPS seen at $0.67 ($0.58 last year) on sales of $29.62bln ($15.81bln). Last week, the group announced a $53m investment to upgrade and improve wireless network services in 2007. The group also shut down its wireless Internet service in United Parcel Service 9's stores, ending a 3Y partnership due to a lack of customer interest. Separately, AT&T signed a new networking services contract with Sunbelt Transformer and will become the Sunbelt's primary provider.

Glaxosmithkline (GBp 1278 ; -0.85% ; GSK ; GSK.L)

On Wednesday, GlaxoSmithCline is seen delivering 1H net income of £2.8bln (£2.81bln last year) on revenues of £11.14bln (£11.62bln). A week ago the Co announced that it would honour up to ten community non-profit organisations that provide 'access to healthcare' in the Greater Philadelphia area at the 11th Annual GlaxoSmithKline IMPACT Awards. Separately, the Co plans to collaborate with scientists in China to research and develop medicines for Alzheimer's and other degenerative diseases.

Apple (USD 143.75 ; 4.37% ; AAPL ; AAPL.O)

On the same day in the US, Apple may post 3Q EPS of $0.71 ($0.54 last year) on sales of $5.3bln ($4.37bln). At the beginning of the month, the Co introduced its new model of iPhone to the market and may sell as many as 14m iPhones by the end of 2008, while previously expecting to sell only 4m. Apple is now in talks with major mobile phone Cos to provide its iPhone in Europe.

ENI (EUR 27.22 ; -3.48% ; ENI ; ENI.MI)

Thursday, Eni is expected to release 2Q net income of E2.09bln (E2.3bln last year). Last month, Eni announced plans to boost natural gas production in Libya and said it could help build roads in the North African country to strengthen its position there. Moreover, in June, Eni agreed to buy a further 2.5% interest in Altergaz for E18.9m, reaching a 28% holding. In other news, the Co is seeking more agreements with OAO Gazprom.

Exxon Mobil (USD 91.94 ; 1.78% ; XOM ; XOM.N)

Finally, Exxon Mobil will announce 2Q EPS of $1.87 ($1.72 last year) on the same day. Last week, the Wall Street Journal announced that Exxon Mobil, Total and Anadarko Petroleum were among oil companies facing new risks in Africa where some governments have re-written contracts and laws to promote national interests. Earlier, the group held talks over the sale of its stake in an oil refinery based in Dunkirk to Total (La Lettre de l'Expansion).