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:

• Urenco holders plan joint sale this yr in fuel maker, EON says

• Heathrow growth to possible 4th runway urged by U.K. lawmakers

• Foreigners buy half of London new homes to prop up development

• RBS CEO Hester says he’d oversee RBS sale if asked: FT

• Schaeuble signals support for easier european austerity at G-7

• Italy can keep tax pledges without budget cuts, Saccomanni says

• German FM Wolfgang Schaeuble signaled support for an easing of Europe’s austerity drive as he prepared to face pressure from global counterparts to do more to spur growth

• Bulgaria’s Gerb is tied with socialists in race for govt

• Yen weakens past 100 per dollar for first time in 4 yrs

Companies in Europe reporting results today:

• UniCredit (UCG IM) afternoon, 1Q adj. EPS EU0.06

• ArcelorMittal (MT NA) 7am, 1Q adj. loss-shr EU0.15

• Generali (G IM) 7:30, 1Q adj. net EU561m

• Eurocommercial (ECMPA NA) 8am, 1Q adj. EPS EU0.51

• IAG (IAG LN) 8am, 1Q Ebit loss EU209m

• BT Group (BT/A LN) 8am, FY adj. EPS GBP0.25

• TUI Travel (TT/ LN) 8am, 1H

• Derwent London (DWNT LN) 8am, 1Q sales, IMS

• Catlin (CGL LN) 8am, 1Q sales, IMS

• Buzzi Unichem (BZU IM) afternoon, 1Q Ebit loss EU39m

• Atlantia (ATL IM) afternoon, 1Q adj. EPS EU0.17

• Exor (EXO IM) afternoon, 1Q

• DiaSorin (DIA IM), afternoon, 1Q

• Parmalat (PLT IM), afternoon, 1Q

Japanese shares led gains in Asia as the yen weakened beyond 101 per dollar for the first time in four years, helping the nation’s exporters compete. South Korea’s won dropped the most since January, while oil declined.

Nikon Corp., a camera manufacturer that gets 85 percent of its sales outside Japan, soared 14 percent as its earnings forecast topped analyst estimates. Sharp Corp. jumped 8.8 percent, bringing this week’s advance to 37 percent, as the Asahi newspaper reported the Japanese television maker will cut 5,000 jobs as it seeks to win bank financing. The Markit iTraxx Japan index, which tracks credit-default swaps, dropped two basis points to 75, according to Deutsche Bank AG prices.

An interesting report was issued by Deutsche Bank research on BG titled 'The beginning of the next growth cycle. Upgrade to Buy. The conclusion from the report is as follows, 'we upgrade our stance on BG to Buy with a raised 1400p price target (was 1350p). Our reasons for doing so not only reflect our view that relative to its opportunity set and business structure BG's valuation is very undemanding. Critically they also encompass our belief that visibility on the forward outlook for E&P is improving and that the quality of the LNG earnings stream has been enhanced by recent contract signings. With '13 the peak of its capex cycle and production expected to start a multi-year ramp from the final qtr of this year we see Q2/Q3 '13 as the turning point for business momentum, a view we expect will be emphasised at BG's impending Strategy Day.

Barclays is another interesting stock to look into. Deutsche Bank have a price target of 380p on the stock. 'Barclays offers exposure to long-term growth and market share gains in capital markets within the investment bank and turnaround leverage in international retail and corporate banking. We think the stock looks extremely cheap on current earnings and given the potential for further upside from cost cuts and business rationalisation under new CEO Antony Jenkins: Buy.'

For more information on BG and Barclays, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli