Equity sell-off continues

MARKET OUTLOOK

- US: US markets continued their consolidation last week as recent economic data point at rising inflation risk (core CPI was 0.3% in April vs 0.2% expected). At least one further rate hike from the Fed is expected in June. Commodity prices declined sharply. Stocks from the transportation, energy and materials sectors fell most. Caution should prevail as high ST yields are offering a good alternative to equity investment at this level. Thursday's 1Q GDP data and Friday's April consumption will be closely watched.

- EUROPE: European markets fell sharply last week which should lead to a pause initially before a further 3-4% drop before the rise resumes. Stocks from the industrial goods, construction materials and basic resources were the most under pressure. The rising euro is tempering rate hikes anticipations in Europe but still hurting exporters. Wednesday's IFO data will be a key driver for the euro and long yields. On the corporate front, watch France Telecom expected 1Q results today and Marks & Spencer on Wednesday.


COMPANY PREVIEW

Lowe's Cos (USD 62.64 ; -1% ; LOW ; LOW.N)

On Monday Lowe's publishes its 1Q results. The market is looking for a 27% jump in 1Q EPS to $0.94 on revenue which is expected to have increased 19% to $11.84bln.

Marks and Spencer (GBp 575 ; -5.12% ; MKS ; MKS.L)

On Tuesday Marks & Spencer reports its full year results. FY EBITDA expected to reach the £745-£755m range, up from the £592m reported last year. The stock's target price was recently raised 5.9% to 650p by JPMorgan.

Medtronic (USD 49.3 ; 1.19% ; MDT ; MDT.N)

Later the same day Medtronic delivers its 4Q results. EPS is seen rising to $0.63 from $0.53 on revenue up 10% to $3.07bln. Rival maker of defibrillators and pace makers St Jude Medical missed its 1Q profit forecast earlier in the month, dragging Medtronic down to a 52-week low.

Gus (GBp 963 ; -6.41% ; GUS ; GUS.L)

On Wednesday GUS posts its FY results. FY underlying profit expected to decrease 9% to £823m from the £906m reported last year. The market will want details on the progress of the company's plan to separate its credit checking and information services Experian from its retail unit Argos.

Network Appliance (USD 33.79 ; 0.03% ; NTAP ; NTAP.O)

And finally on the same day Network Appliance reports its 4Q results. EPS is expected to rise to $0.23 from $0.16 recorded same time last year. The market is expecting 1Q revenue to surge 30% to $585m. The stock was recently rated 'neutral' in new coverage by Merrill Lynch.