US financials under pressure

MARKET OUTLOOK

- US: US markets were mixed last week, the Nasdaq rose while the S&P 500 and Dow Jones posted a moderate decline. Concern about higher interest rate put pressure on financial stocks. The Fed's next meeting is scheduled for December 13 and the market is looking for another 25bps hike to 4.25%.

This week's key economic data to watch will be today's ISM Non Manufacturing, tomorrow's October factory orders and Friday's December Consumer confidence from the University of Michigan. Technically, key supports to maintain the upside bias on US markets stand at 1238 (S&P) and 1642 (Nasdaq 100).


- EUROPE: European markets continued to rise last week on optimism about earnings and as the ECB reassured the market about the pace of future interest rate hikes. The market is only looking for a 25bps rise to 2.5% before March.

On the economic front watch today's PMI Survey for France and Germany and Friday's October industrial production (France) and October trade balance (Germany). Corporate activity should remain low this week.

Technically, the FTSE 100, Dax and Cac 40 remain above their 20 & 50D MAs and keep upside momentum. The Cac 40 finally reached a new 52w high on Friday.


COMPANY PREVIEW

Severn Trent (GBp 1014 ; -1.36% ; SVT ; SVT.L)

Tuesday, Severn Trent publishes its 1H results. Plans either for restructuring or disposing of unregulated assets are expected to be unveiled as the UK water market continues to underperform (the stock is only up 4.9% YTD).


Sears Holdings (USD 119.5 ; 0.29% ; SHLD ; SHLD.O)

Later the same day, Sears Holdings will report its 3Q results. The market is looking for a profit of $0.28 per share on sales of 12.95bln, driven by acquisitions. The stock rose 3.6% to $119.5 on Friday.


Comverse Technology (USD 26.4 ; -2.58% ; CMVT ; CMVT.O)

Then, Comverse Technology will announce its 4Q earnings. The market is looking for $0.15 profit per share on revenue up 19% up to $293m from $245m a year ago.


Stagecoach Group (GBp 121 ; 2.76% ; SGC ; SGC.L)

On Wednesday, Stagecoach Group reports 1H results. The company said last week it had completed the sale of all of its New Zealand operations to Infratil. The stock reached a 52w high on Friday.


Costco Wholesale (USD 49.34 ; -2.45% ; COST ; COST.O)

Finally on Thursday, Costco Wholesale is scheduled to release its fiscal 1Q earnings. EPS is seen at $0.44 on sales up 10% to $12.80lbn. The stock needs to rise through 51.21 (52w high) to allow for further upside.