US markets hit 52 week highs

MARKET OUTLOOK

- US: US markets declined Friday on profit taking, leaving the Dow up week-on-week 1.5%, the S&P500 up 1.6% and the Nasdaq up 2%. August personal spending rose 0.1%, less than expected and the slowest level this year. Last week's gains were driven by stocks from the energy, automobiles and semiconductors sectors. On the downside, stocks from the food and staples retail., telecom. services and food, beverage. and tobacco sectors were under pressure. The S&P500 and Dow Jones reached a new 52 week high last week. Technically, they remain well oriented above their rising 20d moving averages.

- EUROPE: European markets rose, driven by M&A activity (Spanish utility sector) and gains on Wall Street. Stocks from the telecom, basic resources and utilities sectors were bid up. Watch the ECB interest rate decision on Thursday. Investors are expecting a 25bps rate hike to 3.25%. There will be few earnings reports this week so economic data should pace the market. Technically, above their 20d moving averages, European indices keep their positive momentum.

COMPANY PREVIEW

Pepsi Bottling (USD 35.5 ; 3.59% ; PBG ; PBG.N)

Pepsi Bottling Group is scheduled to report its 3Q results on Tuesday before market, with expected EPS of $0.805 ($0.78 a year ago) on a revenue of $3.408bln ($3.214bln). The market sees an increase in revenue and earnings and will pay close attention to bottled water sales, and overall pricing power, while also looking for cost pressures.

Tesco (GBp 360 ; -2.7% ; TSCO ; TSCO.L)

Tesco will report 1H results on Tuesday before market. The market sees group sales up 10.2% to £20.305bln and underlying pre-tax profit up 12.4% to £1.151bln. Tesco has moved from a 24 week 1H to 26 weeks; it also has moved forward by two months the year end for its international businesses and it will give a new definition of underlying clean pre-tax profits.

Neopost (EUR 94.1 ; 1.24% ; NEO ; NPOS.PA)

Neopost will announce its 1H results on Tuesday after market. The markets expect a 16% increase in EBIT to E115m, and a 17% increase in net profit to E76m. The EBIT margin should gain one point to 25.5% compared to 1H last year. The group's EBIT margin guidance is above 25% in FY06. 1H sales reached E450m compared to E404m a year ago.

Marriott International (A) (USD 38.64 ; 0.39% ; MAR ; MAR.N)

Marriott International delivers Thursday before market its 3Q results. The market expects EPS of $0.29 ($0.33 a year ago) on a revenue of $2.801bln ($2.714bln). Last Thursday, the group divulged the model of its new Courtyard by Marriott hotels in Europe, with the opening of the 150 room Paris Courtyard, the first of 50 Courtyard hotels the operator intends to open in Europe over the next five years.

Constellation Brands (USD 28.78 ; 4.31% ; STZ ; STZ.N)

Constellation may report on Thursday 2Q/Aug EPS of $0.43 ($0.41 a year ago) on a revenue of $1.388bln ($1.192bln). On September 14, the stock was rated 'underweight' with target price set at $26 by Prudential.