US and European markets looking good

MARKET OUTLOOK

- US: US markets continued to rise last week on optimism about the 3Q earnings season which kicked off well and anticipation the Fed will not raise interest rate at its next meeting on October 25. Friday, although retail sales ex-auto fell 0.5% (more than expected), the biggest drop since April 2003, the data was masked by a 9.3% decline in gasoline station sales. Ex auto and gasoline, retail sales rose 0.8% after a 0.4% gain in August. The October provisional University of Michigan confidence index rose to its highest level of the year. Stocks from the semiconductors, automobiles and compo. and tech. hardware helped markets trade higher while stocks from the food, bever. and tobac., house. and personal prod. and health care equipment sectors fell. Technically, US indices remain well oriented above their rising 20d moving averages.

- EUROPE: European markets were also well oriented. The rise was fuelled by strong gains in the basic resources, technology and oil and gas sectors, all jumping more than 3% week-on-week. The media sector was the only one closing moderately lower. On the economic front watch tomorrow's Zew survey in Germany. The major indices reached new highs for the year and from a technical point of view the current positive momentum can continue. Watch any test of the rising 20d moving averages as early signs of a possible consolidation.

COMPANY PREVIEW

Intel (USD 21.6 ; 4.7% ; INTC ; INTC.O)

Intel reports on Tuesday after market its quarterly results. 3Q/Sep EPS is seen at $0.17 ($0.32 a year ago) on a revenue of $8.62bln ($9.96bln). Analysts expect the group to both lose market share and register lower margins, amid intensifying competition. Watch the group's order book.

Johnson and Johnson (USD 64.58 ; -0.74% ; JNJ ; JNJ.N)

Johnson & Johnson is scheduled to deliver results on Tuesday before market. 3Q/Sep EPS is seen at $0.93 ($0.87 a year ago) on a revenue of $13.08bln ($12.31bln). On October 6, the group won US approval to market its best-selling schizophrenia drug Risperdal for autism symptoms in children and teens. In other news, Boehringer Ingelheim Pharmaceuticals announced that it has entered into an agreement with JNJ and Pfizer to acquire the US rights to the over-the-counter Zantac product line for $509.5mln in cash.

Novartis (CHF 72.6 ; -0.41% ; NOVN ; NOVN.VX)

Novartis will report its results on Thursday. 3Q/Sep EPS should reach SF0.92 on a revenue of SF12bln. The group announced last week the start of Galiant, a significant clinical trial set to involve more than 7,500 people in the US comparing the investigational oral type 2 diabetes medication Galvus(R) (vildagliptin) with commonly prescribed anti-diabetic oral medicines called thiazolidinediones (TZDs).

Citigroup (USD 50.38 ; -1.31% ; C ; C.N)

Citigroup is expected to deliver on Thursday 3Q/Sep EPS of $1.03 ($0.97 a year ago). The group is looking to expand in Eastern Europe to take advantage of faster growth in the region. There are also recurrent rumours it could go for large European bank.

Google (USD 427.3 ; 1.62% ; GOOG ; GOOG.O)

Finally the same day, look for Google's 3Q/EPS results. The market is expecting EPS of $2.42 on sales of $1.8bln. Better than expected results could push the stock towards $450, $460 and then its record high at $475.11. A break below $390 however would be negative for the stock.