Dow Jones close to record high

MARKET OUTLOOK

- US: US markets rose last week. Corporate earnings were generally strong and on Friday job creations in April came in lower than expected, prompting speculation that the Fed would pause soon its rate hike cycle. The Fed is meeting this week (May 10) and economists are expecting a 25bp hike to 5%, then the next meeting will be on June 29. The Dow Jones is near its record high reached in January 2000. US indices could advance further this week. Stocks from the transportation, capital goods and food & staples retail sectors gained most. Watch this week reports from Disney and Cisco.

- EUROPE: In Europe, the situation was similar. The euro continued to rise against the dollar as the ECB prepared the market for a 25bp rate hike to 2.75% in June. Stocks from the basic resources, financial services and utilities sector drove indices higher. Gold jumped to a 25yr high. The last two day gains could translate into further advance once the major indices reach new 52w highs. Watch this week Deutsche Telekom and Telefonica in the telecom sector (France Telecom pays a E1 dividend on May 09).


COMPANY PREVIEW

Walt Disney (USD 29.09 ; 4.04% ; DIS ; DIS.N)

On Tuesday Disney publishes its 2Q results. EPS is seen dropping a cent to $0.31 YoY on revenue up 4.5% to $8.18bln. The company completed the $8.6bln acquisition of Pixar Animation Studios after shareholders approved the deal late last week.

Cisco Systems (USD 21.75 ; 3.82% ; CSCO ; CSCO.O)

On the same day after markets close, Cisco releases its 3Q earnings. EPS expected to rise by a cent to $0.26 YoY, on revenue up close to 16% to $7.16bln. The company was recently added to Goldman Sachs' favourite technology growth stock list, ousting Google in the process.

News Corp (USD 17.79 ; 3.67% ; NWS/A ; NWS-A)

On Wednesday after the close of trading News Corp releases its 3Q results. The market is expecting the group's EPS to have surged 35% to $0.20 compared to the same time last year, on revenue estimated to have grown approximately 3% to $6.25bln.

Deutsche Telekom (EUR 13.82 ; -3.49% ; DTE ; DTEGn.DE)

On Thursday Deutsche Telekom reports its 1Q results. Net income for the quarter is expected to rise 2.7% to E1.01bln on revenue up 5% to E15bln.

Telefonica (EUR 12.85 ; 1.02% ; TEF ; TEF.MC)

And finally, on the same day, Telefonica publishes its 1Q results after the company recently agreed to sell its 59.9% stake in Telefonica Publicidad e Informacion for E3.07bln to UK-based Yell Group.