Downside risk in US equities

MARKET OUTLOOK

- US: US markets declined last week on higher oil prices and long yields. The start of the earnings seasons failed to spark any major buying opportunity, this week will be a lot more active. Stocks from the telecom services, utilities and real estate fell most while the media sector managed to post a modest gain. This week, expect indices to move along with earnings releases but the bias still lies towards further downside.


- EUROPE: All European markets fell last week. The rebound of the euro is starting to pressure exporting firms and the decline on Wall Street is adding to the negative sentiment. Stocks from the insurance, auto and construction sectors fell last week. Once again there will be barely no major European corporate reports except SAP and Ericsson in the software and technology sector.


COMPANY PREVIEW


Johnson and Johnson (USD 57.91 ; 0.14% ; JNJ ; JNJ.N)

On Tuesday Johnson & Johnson reports its 1Q results. The market is looking for an EPS of $0.98 ($0.97 same time last year) on revenue reaching $13.22bln ($12.83bln a year earlier). The stock was trading lower last week due to the prospects of cuts in Medicare's reimbursement for hospital procedures related to heart devices.


IBM (USD 81.98 ; -0.61% ; IBM ; IBM.N)

After the close of trading on the same day IBM posts its 1Q earnings. EPS expected at $1.04, up from $0.85 a year earlier on revenue of $20.72bln, down from $22.90bln.


Pfizer (USD 24.5 ; -0.77% ; PFE ; PFE.N)

On Wednesday Pfizer reports its 1Q results. The group agreed to buy the rights to Schwarz Pharma's experimental bladder drug for as much as $210m at the end of last week.


SAP (EUR 182.75 ; -0.83% ; SAP ; SAPG.DE)

SAP scheduled to release its 1Q earnings on Thursday. Net income is expected to rise 18% to E300m while revenue is seen gaining 14% to E1.98bln. License revenue, a measure of future business growth, is expected to rise 17% to E512m.


Ericsson (B) (SEK 29.5 ; 1.38% ; ERICB ; ERICb.ST)

And finally on Friday Ericsson reports its 1Q results. The group's joint venture with Sony posted more than a tripling of net income for the 1Q to E109m from E32m last Thursday, on revenue which rose 55% to E1.99bln.