Retail sales data boosts US markets

MARKET OUTLOOK

- US: US markets closed up week-on-week helped by better than expected September retail sales data. Shares from automobile and components, food and staples retailing, software, energy and technical hardware gained most, while banks, semiconductors and telecommunication services were under pressure. From a technical point of view, despite the lack of ST momentum, US indexes should continue to rise in forthcoming days.

- EUROPE: European markets rose last week due to investors considering that US recession, inflation and credit issues present downside risks. Stocks from telecommunications, oil and gas, automobile and parts were among the best performers, while banks, retail and construction and materials lost ground. Technically, even if a slight consolidation cannot be ruled out in the early stage of the week, the bullish bias should still prevail.

COMPANY PREVIEW

Philips Electronics (EUR 32.15 ; 4.11% ; PHIA ; PHG.AS)

On Tuesday, Philips Electronics is seen reporting Q3 net income of E366m (E4.24bn last year) on revenues of E6.36bn (E6.31bn). Last week, the Co sold LG.Philips LCD shares for E1.55bn taking advantage of a surge in the Co's stock this year. A day earlier the world's second-largest maker of liquid-crystal displays reported its biggest profit in more than three years. At the beginning of October, Philips won $103.8m in damages in two patent-infringement cases over DVD players.

IBM (USD 117.81 ; 1.3% ; IBM ; IBM.N)

In the US, IBM will announce Q3 EPS of $1.45 ($1.67 last year) on sales of $22.61bn ($24.1bn) on the same day. Last week the Co intended to develop new technologies and methodologies based on open standards to help advance the future of 3D virtual worlds. Separately, Insolvency Service and IBM were awarded a five year contract worth approx. 20m UK pounds to transform the IT environment of the UK Government department.

Coca Cola (USD 57.8 ; -0.47% ; KO ; KO.N)

Wednesday, Coca-Cola is scheduled to present Q3 earnings. Q3 EPS is seen at $0.68 ($0.62 a year ago) on sales of $7.27bn ($6.45bn). Coca-Cola announced in August that it planned to sell a $147m stake in Australia's Coke bottler. Separately, Coca-Cola declared in August that it aims to become the leader in Germany's mineral water market (Die Welt).

Novartis (CHF 63.45 ; -0.86% ; NOVN ; NOVN.VX)

Novartis will deliver Q3 net income of $1.78bn ($1.86bn a year earlier) on revenues of $9.34bn ($9.48bn) on Thursday. A week ago, the Co's Aclasta drug won European Union approval as the first once-a-year treatment for osteoporosis in post-menopausal women. In other news, the Co pulled its Prexige arthritis medicine from the Canadian market because regulators found serious liver side effects that couldn't be managed safely.

Bank of America (USD 52.07 ; -1.21% ; BAC ; BAC.N)

Finally, on the same day Bank of America is expected to post Q3 results. Q3 EPS is seen at $1.06 ($1.18 last year). Last Thursday, Bank of America recommended selling the euro against the yen because of a narrowing yield on interest-rate swaps between Europe and Japan. At the beginning of October, the bank planned to start a new advertising campaign with US Trust which it bought from Charles Schwab (NY Times). The Co's CEO has recently reported that Bank of America isn't 'immune to losses stemming from record defaults of subprime' US mortgages.