Fed cut provides lift to US stocks

MARKET OUTLOOK

- US: US markets continued to rise last week after the Fed cut interest rate by 50 basis points to 4.75%, while economists were only expecting a 25 basis points cut. Investors hope this aggressive move will help restore confidence in the market. Stocks from the energy, telecom. services and materials sectors gained most, while the cons. durables, media and transportation sectors under-performed. US indexes are back near their highs for the year and a clear break above is needed to see further upside.

- EUROPE: European markets were also up in line with Wall Street. The financial sector continues to draw scrutiny with Northern Rock's ongoing difficulties. The euro continued to trade higher hitting a record high and increasing calls for the ECB to refrain from raising interest rates. Stocks from the automobiles and parts, financial services and basic resources rose the most last week. However, shares in the travel and leisure and food and beverage sectors fell week-on-week. The strength of the euro may dampen the bullish mood somewhat this week and caution should prevail.

COMPANY PREVIEW

Neopost (EUR 108.85 ; 0.57% ; NEO ; NPOS.PA)

Neopost is seen reporting H1 net income of E80.2m on revenues of E470m on Tuesday. At the beginning of the month, the Co reported that Q2 revenues rose 8% to E244.2m and reiterated that it expects revenues to increase 5-6% this year. Earlier, Neopost said Q1 revenues were little changed, amounting to E226.2m vs E223.3m a year ago.

Discover Financial Services (USD 22.4 ; 5.31% ; DFS ; DFS.N)

In the US, Discover Financial will announce Q3 earnings on the same day. Q3 EPS is seen at $0.38 before market. In July, Discover Financial Services announced that Discover Card received top honours for the tenth consecutive year in the 2007 Brand Keys Customer Loyalty Engagement Index. Separately, on July 2 the Co's shares started trading on the New York Stock Exchange as an independent company after it was split from Morgan Stanley.

Lennar Corp (USD 25.32 ; -1.52% ; LEN ; LEN.N)

Still on Tuesday, Lennar Bay Area Homebuilding may report a Q3 LPS of $0.55 (EPS of $1.30 a year ago) on sales of $2.39bn ($4.18bn). At the beginning of September, Lennar announced two new Bay Area solar-driven communities of single family detached homes. Earlier, the Co unveiled a plan to restore wetlands and create a substantial shoreline park.

Hennes and Mauritz (B) (SEK 402.5 ; 7.48% ; HMB ; HMb.ST)

Wednesday, Hennes and Mauritz is scheduled to deliver Q3 net income of SK3.15bn (SK2.54bn last year) on revenues of SK19.04bn (SK16.75bn). Hennes and Mauritz reported June revenues at stores open at least a year rose 5%, while total shop revenue gained 17% beating the average analysts' estimate of 16%. Later, Hennes and Mauritz announced that July same-store revenues growth increased 2%, missing the 3.3% median estimate and total shop sales advanced 14% compared to the 15% expected.

Paychex (USD 43.44 ; 0.86% ; PAYX ; PAYX.O)

Finally, Paychex could post Q1 EPS of $0.39 ($0.35 a year ago) on sales of $512.1m ($459m) after market. In August, Paychex started its share buy back programme, which includes the repurchase of $1bn of common stock. A week ago, the Co acquired Hawthorne Benefit Technologies and BeneTrac.