ANOTHER WEAK SHOWING AFTER U.S. LOWS
Copyright 2002 AFX

[ June 14th 2002 ]

The downside pressure on European markets looks set to continue into the last day of the trading week, with brokers anticipating another tough session for stocks here as Wall Street ratcheted lower again overnight amid corporate governance and political concerns, dealers said. And there are now also real concerns about the strength of the economic recovery in the world's largest economy, with Thursday's very weak retail sales figures delivering a real blow to confidence.

The news triggered a wave of selling on Wall Street, with the DJIA closing 114.91 points lower at 9,502.80, and the Nasdaq 22.23 points lower at 1,496.89. In sell-off was followed through in Asia, with the Nikkei 225 index closing 43.87 points weaker at 11,100.97, and the Hang Seng ending its morning session 100.72 points lower at 11,018.61. After yesterday's weak US monthly retail sales data ignited worries about the strength of the economic recovery, the main focus today will be on a major batch of economic data again, due in both the UK and US. The real key for sentiment will be the latest University of Michigan consumer sentiment index, which is forecast to fall slightly to 96.6 in the preliminary reading for June, after rising to 96.9 in May's final reading.

On the corporate front, TMTs could be in for a tough day after further falls on Nasdaq overnight. And Telecoms could be particularly badly hit after cautious comment overnight from US peer Sprint. The US firm said it expects full-year revenues from its FON Group unit to decline more than it had previously forecast. The company said its expects FON Group revenues to decline at a mid-single digit rate compared to its previous expectation that revenues could decline at a low-single digit rate. Sentiment in the Telecoms will also be hurt by very negative comment in the Financial Times on debt levels at some of Europe's biggest incumbents, with France Telecom and Deutsche Telekom named as the worst offenders.

In the Techs, Infogrammes, Eidos, and Ubisoft are expected to attract fresh selling after shares in US firm Adobe slipped 6 pct in after-hours trading after the software company lowered its guidance. Elsewhere, Deutsche Post could see early falls after teh Financial Times reported that it could face a 570 mln eur penalty because of government subsidies. And Germany's RWE could also be in for a tough session after Standard & Poor's move yesterday to lower the utility firm's debt ratings.

Schindler is also seen weak as the stock goes ex-div today, and then makes a 10-for-1 share split, with ex-div factors also weighing on Dexia. But Altran could see an early bounce after the group repeated its growth target and denied rumours of any planned share offering. Remy could also head higher after very positive comment in the FT's influential Lex column.