US investors look for positive signals

MARKET OUTLOOK

- US: US markets had a pause last week on volatile oil prices. This week's economic data will need to show continued growth with constrained inflation pressures to keep a positive sentiment among investors. There will be few earnings reports apart from the retail sector with Costco Wholesale and the home improvement sector with Lowe's. On the technical front, the indices remain well oriented and are set to continue their upward path.


- EUROPE: European markets traded higher last week driven by strong M&A activity (E.ON and Endesa, Gaz de France and Suez). Corporate earnings will be numerous and investors will shift their attention to 2006 outlook. German unemployment rate will be watched closely tomorrow. Technically speaking, this week looks set to for a continuation of the rise with new highs for the year in sight.


COMPANY PREVIEW


Axa (EUR 29.32 ; 0.76% ; CS ; AXAF.PA)

Tuesday Axa delivers its FY earnings. Net income is expected to rise 3.5% to E3.83bln on high cash inflows to the bank's US asset-management unit and a strong performance in its life-insurance division. Details of 2006's variable annuity products in Europe and Japan are expected.


Telefonica (EUR 12.91 ; -1.15% ; TEF ; TEF.MC)

On Wednesday Telefonica reports its FY results, the market is looking for net income for FY to rise to E4.32bln from E2.88bln in 2004. The group was recently found guilty of abusing of its dominance in Spain's broadband Internet market by EU regulators and could face fines of up to 10% of its annual revenue.


Vivendi Universal (EUR 25.15 ; -2.06% ; EX ; EAUG.PA)

On the same day Vivendi Universal posts its FY earnings. Net income is expected to nearly triple to E2.07bln from E754m in 2004, while sales are expected to drop 9.1% to E19.47bln. The group recently agreed to sell a 20% stake in its Canal Plus pay-TV unit to Lagardere in exchange of its 34% stake in Canal Satellite and E525m.


Deutsche Telekom (EUR 13.39 ; -1.69% ; DTE ; DTEGn.DE)

Friday Deutsche Telekom posts its full year results. The market is looking for net income of E5.04bln, up from E4.63bln in 2004 on revenue of E59.66bln (E57.88bln last year). The telephone company denied reports suggesting it would cut its annual dividend and declared it would at least match the E0.62 paid in 2004.


Costco Wholesale (USD 50.69 ; -2.03% ; COST ; COST.O)

And finally before US markets open on the same day, Costco publishes its 2Q earnings. Consensus estimates EPS at $0.60 ($0.55 a year ago) on sales of $13.79bln ($12.66bln).