US equities continue to rally

MARKET OUTLOOK

- US: markets continued their rally last week, driven by better than expected economic data and corporate activity. The next FOMC meeting is on December 13 and the market is factoring a 25bps hike to 4.25%. The 3Q earnings seasons is slowing down and the market is turning to the Xmas holiday season and mid-4Q updates.

Technically, the current bounce could lose steam and mark a pause as the S&P 500 and Nasdaq 100 get closer to their 52w highs respectively at 1245.8 and 1635.7. Key supports to maintain the upside bias stand at 1180 (S&P) and 1543 (Nasdaq 100).


- EUROPE: European indices continued to rise in sympathy with Wall Street and also driven by better than expected earnings from European companies. This week the market will focus on: October CPI data in France and Germany and France's 3Q GDP. Technically, the FTSE 100, Dax and Cac 40 are trading once again above their 20 & 50D MAs. Expect a retest of the yearly highs before a pause can shape.

COMPANY PREVIEW

Deutsche Telekom (EUR 14.93 ; 1.36% ; DTE ; DTEGn.DE)

On Wednesday, Deutsche Telekom will report its 3Q results. The telecom company has ruled out bidding for O2 after Telefonica's 200 pence cash bid. DT will cut 32000 jobs over the next three years. The stock is trading 13 times its 2005 estimated results compared to 11 times for France Telecom.


Cisco Systems (USD 17.87 ; 4.26% ; CSCO ; CSCO.O)

The same day, Cisco systems will release its fiscal 1Q results. The market is looking for a 9% rise in EPS to $0.24 on revenue up 10% to $6.57bln. The stock is down 7.5% YTD compared to a 0.5% rise for the Nasdaq 100.


Siemens (EUR 62.14 ; 2.64% ; SIE ; SIEGn.DE)

On Thursday engineering group Siemens will announce its fiscal 4Q results. The market is expecting net income to decline to E380m, hurt by losses at its mobile phones unit. Sales should grow in the low single digit to E21.4bln.


Dell Computer (USD 29.76 ; -4.19% ; DELL ; DELL.O)

Later in the day, Dell will announce its fiscal 3Q results. The PC manufacturer already warned about them a few days ago. EPS should reach $0.39 on sales of $13.9bln. YTD the stock is down 29.4%. The next supports stand at 28.81 (52w low) and 28.


Allianz (EUR 119.2 ; 3.45% ; ALV ; ALVG.DE)

Finally on Friday Allianz will deliver its 3Q results which should improve 70% to E880m thanks to its banking unit and despite losses from the worst US hurricane season on record.