Markets await Fed rate cut decision

MARKET OUTLOOK

- US: US markets ended flat last week as investors wait for the Fed's decision over a possible key interest rate cut. Almost all sectors managed to outperform the market, especially stocks from semiconductors, energy, materials, utilities and transportation. Only shares from automobiles and components, media and banks lost ground week-on-week. From a technical point of view, even if a major decline isn't imminent, US indexes are now close to key resistance levels (61.8% Fibo retracements). Thus, last week's bounce should now be over and a downturn is now favoured.

- EUROPE: European markets rose slightly as banks felt the benefit of a possible interest rate cut by the Fed. Stocks from chemicals, utilities, basic resources, insurance and oil and gas were the best performers, while travel and leisure, automobiles and parts, food and beverages and media were under pressure last week. Technically, European indexes are now close to their trend line resistances. Some profit taking should occur followed by a downturn.

COMPANY PREVIEW

Kroger (USD 28.39 ; -1.25% ; KR ; KR.N)

On Tuesday, Kroger Co will post Q3 EPS of $0.34 ($0.3 a year earlier) on sales of $15.6bn compared with $14.7bn last year. A few weeks ago, the Co's union members in Cincinnati approved a new labour agreement. At the end of October, the Co recalled its Kroger brand smoked salmon dip as a deadly bacterium was found during an inspection, which was distributed to most Kroger stores in the worldwide.

Inditex (EUR 47.71 ; 0.19% ; ITX ; ITX.MC)

On Tuesday, Inditex will announce its Q3 earnings. Q3 net income seen at E411m (E634m last year) on revenues of E2.55bn (E5.66bn). At the beginning of the month, the group wanted to start a chain that would sell fashion accessories (Drapers). The Co Q2 earnings beat analysts' estimates after it opened Zara and Bershka stores in France, the UK and Italy. So, net income for the Q2 rose 34% year-on-year to E193m and exceeded E179m median analysts' estimate.

Lehman Brothers Holdings (USD 63.47 ; 1.34% ; LEH ; LEH.N)

Thursday, Lehman Brothers is scheduled to deliver Q4 EPS of $1.49 ($1.72 a year ago). Last week, the Co acquired the NYSE specialist operations of Van der Moolen to meet investor demand for faster trades. About a month ago, Lehman Brothers intended to double its serviced apartments in Japan. The plan included a rise of ST apartments to 14,000 in 2008-2009. In the middle of November, the Co posted $6.3bn of subprime exposure by Q3.

Costco Wholesale (USD 71.83 ; 6.57% ; COST ; COST.O)

On the same day, Costco Wholesale Corp may present Q1 EPS of $0.58 ($0.51 a year ago), while sales are expected to rise to $15.7bn compared with $14.2bn last year. At the beginning of December, the Co delivered November sales up 13% beating the 9% consensus. Earlier, in October, the Co nearly reached the same growth rate with sales of the US outlets up 7% and an international rise of 17%.

Bear Stearns Companies (USD 100.94 ; 1.24% ; BSC ; BSC.N)

Finally, Bear Stearns may release its Q4 LPS of $1.7 (EPS of $4 last year) on Friday. Last week, the Co's clients filed a claim due to the $62m losses of its hedge-fund. Recently, the Co announced it could cut another 650 jobs to save costs. In the middle of November, Bear Stearns' credit rating was cut by S&P as the Co announced a write-down programme of the subprime assets value of $1.2bln.