Tougher times for equities

MARKET OUTLOOK

- US: markets remained under pressure last week as investors ignored generally better than expected 3Q corporate earnings to focus on lower energy prices and inflation risk. The prices paid component in the October Philex index rose more than expected.

The GDP report on Friday will give further insight about the impact of Katrina and the extent of rate hikes from the Fed that should be expected. Technically, US indices reached new lows and the S&P 500 could drop down to 1153 and then 1130 before a bounce can be considered. On the Nasdaq 100, the current risk is for 1485 and 1430 in extension.


- EUROPE: markets fell further in line with Wall Street. On Tuesday investors will watch the IFO survey and on Friday the October Euro zone inflation report. The ECB has increased its warnings recently about the risk of rising inflation in Europe. Technically, European indices should remain under pressure and resume their down trend towards the August lows.


COMPANY PREVIEW


Merck (EUR 69.84 ; 0.93% ; MRK ; MRCG.DE)

Merck KGaa will announce tomorrow its 3Q results. Earlier this month Deutsche Bank rated the supplier of liquid crystals used in flat-panel screens "buy" with a price target at E83. The stock is up 36% year to date.


ConocoPhillips (USD 58.15 ; -6.71% ; COP ; COP.N)

Wednesday, before the opening bell Conocophillips will report its 3Q results. The market is looking for a 75% rise in EPS to $2.56, driven by higher energy prices. The recent drop in oil prices has triggered a 19.2% from its September 22 high.


Alcatel (EUR 10.4 ; -2.44% ; CGE ; CGEP.PA)

Thursday, Alcatel will publish its 3Q results. The market is looking for a profit per share of E0.10. The company has been long rumoured to be considering an alliance with French electronic defence company Thales.


Microsoft (USD 24.78 ; 0.45% ; MSFT ; MSFT.O)

The same day, Microsoft will report after the close its fiscal 1Q results. The consensus EPS forecast is pegged at $0.30 compared to $0.31 in the same period last year. The software maker said last week it plans to hire 2000 new employees in the next 12 months in Europe.


Deutsche Bank (EUR 74.96 ; -1.96% ; DBK ; DBKGn.DE)

Finally, Deutsche Bank will announce on Friday its 3Q results. Its performance should be driven by strong results from its investment banking division. Pretax profit is expected to rise at least 50% from the E1.00bln reported in the same period last year.