FOMC meeting focus for markets

MARKET OUTLOOK

- US: The S&P 500 & Nasdaq 100 declined last week while the Dow Jones ended unchanged. Stocks from the auto and semiconductor sectors led the gainers while stocks from the real estate and utility sectors were under pressure.

This week's focus will be the FOMC meeting on March 28. The market is looking for a 25bp rate hike to 4.75% but will more importantly try to determine whether the rate hike cycle is about to come to an end. Technically, US markets remain well oriented for now.

- EUROPE: European markets rose last week appart from the S&P/MIB and to a lesser extent the SMI. Strong earnings and M&A activity continue to fuel the rise. Stocks from the basic resources and chemical sectors gained most.

Technically, European markets can keep their upside momentum but are close to major horizontal resistance which could lead to a consolidation. New long positions should therefore be taken cautiously. Watch Tuesday's IFO data in Germany.

COMPANY PREVIEW

Walgreen (USD 44.37 ; -2.1% ; WAG ; WAG.N)

On Monday Walgreen reports its 2Q results. The market is looking for an EPS of $0.52, up from $0.48 a year ago on revenue which is expected to have climbed 11% to $12.24bln.

Paychex (USD 40.12 ; -0.55% ; PAYX ; PAYX.O)

On Tuesday Paychex delivers its 3Q earnings. EPS is expected at $0.30 on revenue of $426m. The group was recently rated 'buy' in new coverage by Bank of America.

Hennes and Mauritz (B) (SEK 300 ; -0.17% ; HMB ; HMb.ST)

Hennes & Mauritz is expected to report on Wednesday a solid increase in first quarter profits driven by higher sales, investor focus however will likely be on gross margin development and 2006 outlook. Pretax profit seen rising to SEK2.69bln from SEK2.31bln.1QA sales seen rising 17% to SEK14.87bln.

Banca Monte Dei Paschi Siena (EUR 4.658 ; -1.69% ; BMPS ; BMPS.MI)

On the same day, Banca Montei dei Paschi Siena reports its FY results. The world's oldest bank is rumoured to be a takeover target for rival Sanpaolo IMI, after several reports in Italy's national press.

Best Buy (USD 54.38 ; -4.6% ; BBY ; BBY.N)

And finally on Friday Best Buy posts its 4Q earnings. EPS is seen climbing to $1.29 from $1.03 same time last year on revenue of $10.51bln. The group may acquire China's Five Star Appliance in a deal which would value the company at $200m, in bid to gain a foothold in the lucrative Chinese domestic market.