Sharp falls on Wall Street

MARKET OUTLOOK

- US: Rising concern about inflation and the impact of high commodity prices (gold reached a 26yr high, copper and aluminium record levels) finally translated into a consolidation. The Dow Jones, Nasdaq 100 and S&P500 fell sharply Thursday and Friday. They broke below their 20D & 50D MAs. The dollar continued to weaken against the euro and yen which should favour exporting firms. Stocks from the diversified financials, technology hardware and semiconductors sectors fell most. Watch results this week from Wal-Mart which should give an indication of consumer spending in the US. Indices should remain under pressure for the time being.

- EUROPE: As usual, European markets followed Wall Street and since the major European indices have failed to accelerate upward and instead reversed down, the risk is now for a 3-5% decline before a stabilisation can shape. Therefore caution should prevail when taking long positions. The strength of the euro is hurting European stocks. Stocks from the utilities, oil and technology sectors were under the most pressure. Watch BNP Paribas' results on Friday.


COMPANY PREVIEW

Target (USD 52.21 ; -4.27% ; TGT ; TGT.N)

On Monday Target reports its 1Q results. The market is looking for an EPS up 15% to $0.63, on sales of $12.79bln ($11.47bln). The company's April same-store-sales rose 10.4% (10.2% consensus).

RWE (EUR 64.5 ; -6.07% ; RWE ; RWEG.DE)

On Tuesday RWE publishes its 1Q earnings. Net income for the quarter is expected to rise to E1.08bln on revenue of E11.42bln.

Wal-Mart (USD 46.54 ; -1.5% ; WMT ; WMT.N)

On Tuesday Wal-Mart reports its 1Q results. EPS is seen rising 11% to $0.61 on revenue up 13% to $80.32bln. The group's April same-store sales in the US rose by 6.8%, more than its 4-6% forecast range.

Dell Computer (USD 24.02 ; -6.46% ; DELL ; DELL.O)

On Thursday Dell reports its 1Q results. Dell has cut its 1Q EPS guidance to $0.33 from $0.36-0.38 ($0.38 consensus), revenue should reach $14.2bln compared to a prior forecast of $14.2-14.6bln ($14.5bln consensus). The PC maker blamed price cut and expects current 'measures to ultimately results in industry leading growth for the company'.

BNP Paribas (EUR 76.25 ; -0.91% ; BNP ; BNPP.PA)

And finally on Friday BNP Paribas delivers its 1Q results. Net income is seen at E1.58bln. The stock was recently raised to 'buy' from 'hold' by Societe Generale.