Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called to open flat this morning. This is what's happening today:

• Nokia advances on report Huawei considering acquisition;

• Alcatel will unveil strategic plan, with announcements on asset sales, restructuring, new financial targets all expected;

• Alcatel-Lucent plans to cut EUR1b in costs, Les Echos reports;

• U.K. banker bonuses face delays of a decade in industry overhaul;

• BOE will reveal how much capital U.K. banks need in the first public test of its credibility and transparency since it took back the role of financial regulator;

• RBS breakup suggested as option for Cameron by U.K. lawmakers;

• Sweden to Cut Nordea Stake to 7.8% to Reduce National Debt;

• Lloyds director Matt Young sells 81,053 Shrs at 62.53p/Shr;

• Nordea shrs offered at SEK75-SEK76 each in placing: Terms;

• Hungary MNB still wants to see lower 2-week bond holdings;

• Armstrong Ventures: not now involved in any talks on takeover;

• BHP says ‘several’ bidders interested in Kelar power station;

• Shareholders of GSW Immobilien, Berlin’s largest residential landlord by mkt value, passed a no-confidence vote against its CEO following complaints from investors about how his hiring was handled.

EARNINGS All times CET, estimates where available:

• Hennes & Mauritz (HMB SS) 8am, 2Q adj. EPS est. SK2.94;

• Berkeley Group (BKG LN) 8am, FY adj. EPS est. GBP1.46;

• Imagination Technologies (IMG LN) 8am, FY EPS GAAP est. GBP0.04;

• Darty (DRTY LN) 8am, FY adj. EPS est. EUR0.02;

• Micro Focus (MCRO LN) 8am, FY adj. EPS est. $0.83;

• Spirit Pub (SPRT LN) 8am, 3Q sales, trading

European stock futures gained before the outcome of a Federal Reserve meeting that may shed light on the future for U.S. monetary stimulus, while Japanese shares

were buoyed by a pickup in exports. Euro Stoxx 50 contracts were up 0.2 percent at 7:17 a.m. in London, while those on the Standard & Poor’s 500 Index futures added 0.1 percent. The Topix index of shares rose 1.9 percent in Tokyo, driving a 0.9 percent advance in the MSCI Asia Pacific Index. The Shanghai Composite Index lost 0.7 percent amid signs a cash crunch is worsening in Asia’s biggest economy. Malaysia’s ringgit dropped 0.3 percent versus the greenback, while wheat fell and oil rose toward a nine-month high.

More than $2 trillion has been shaved from global stocks since May 22, when Fed Chairman Ben S. Bernanke signaled an asset-buying program aimed at bolstering the U.S. economy could be scaled back. He will speak to reporters when a two-day policy meeting concludes today. Japan’s exports surged in May by the most since 2010 as the yen weakened and shipments to the U.S. jumped, boosting Prime Minister Shinzo Abe’s campaign to revive the world’s third-largest economy.

“The Fed meeting has certainly been one of the key focus points for investors globally over the past couple of weeks,” said James Lindsay, an Auckland-based fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion. I don’t think the Fed wanted as much of a reaction as they received. What was meant to be very mild comments led to huge changes in bonds, currencies and equity markets.”

Stock to watch: Adobe ($43.36, Price Target $50)

Deutsche Bank Research: We see the shares offering an attractive risk/reward at these valuation levels given Adobe's long-term growth profile, competitive position, and margin structure. We look for Adobe's performance across all business segments to accelerate in FY12-FY13, benefiting from the CS6 launch. We believe the Omniture and other recent acquisitions will position the company for stronger long-term growth while driving accretion. Buy.

For more information on Adobe or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli