DAILY MARKET REPORT

‏28-05-2014

INTERNATIONAL MARKETS

Index Last Change DJIA 16,675.50 69.23 S&P 500 1,911.91 11.38 NASDAQ 4185.808 31.47 NIKKEI 14,694.81 58.29 HANG SENG 23,133.99 189.69 DJ EURSTOXX 50 3,240.39 37.11 FTSE 100 6,844.94 29.19 CAC 40 4,529.75 2.82 DAXX 9,940.82 48.00

 US  S&P 500 closes at new high, led by banks; Nasdaq rallies 1%  Home prices jump in March: S&P/Case-Shiller  Pfizer decides to drop AstraZeneca deal  Durable goods orders jump, but capital spending sags in April  US consumer confidence at 83.0 in May, matching expectations

Stocks finished broadly higher Tuesday, with the S&P 500 setting a new record, as investors cheered a batch of better- than-expected economic reports and merger activity. The Dow Jones Industrial Average rallied 69.23 points to close at 16,675.50, lifted by American Express and JPMorgan. The blue-chip index is approximately 60 points from reaching its all- time high of 16,735.51. The S&P 500 rose 11.38 points to end at 1,911.91. And the Nasdaq jumped 51.26 points to finish at 4,237.07. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed above 12. Most S&P sectors finished higher, led by financials and techs. U.S. equity markets were closed Monday for the Memorial Day holiday. Among momentum stocks, Priceline, Tesla, Expedia and Facebook all rallied broadly. On the economic front, durable goods unexpectedly rose 0.8 percent in April, according to the Commerce Department, exceeding expectation for a loss of 0.7 percent. Adding to positive news, S&P/Case-Shiller's composite index of 20 metropolitan areas rose 0.9 percent in March, edging past expectations for a gain of 0.7 percent. Meanwhile, consumer confidence hit 83 in May, in line with expectations. Gold prices slipped 2 percent to a 3-1/2 month low, extending losses after strong data lifted optimism about the economy. Gold miners including Barrick Gold, Newmont and Goldcorp were trading lower. Pfizer edged up a day after the drugmaker walked away from its $116 billion bid to acquire AstraZeneca. AstraZeneca shares dropped. spiked more than 20 percent after the packaged food company was offered to be bought by poultry producer Pilgrim's Pride

in a deal valued at $5.6 billion. Shares of Pinnacle Foods, which is in the process of being acquired by Hillshire, fell. Over the weekend, the Financial Times reported that Apple will announce a software platform for its iPhone that will control home appliances. The announcement is expected at the company's Worldwide Developer Conference, which begins June 2. Aeropostale surged after the apparel retailer said it secured a $150 million credit facility from private equity firm Sycamore Partners, in what could be a lifeline for the struggling chain. Aeropostale reported its sixth straight quarterly loss last week. Netflix agreed to buy the earliest home video rights to Sony's animated films. The deal, effective immediately and good for several years, effectively carves out the animated features from the Sony films that currently air on Starz shortly after they appear in theaters.

 EUROPE & UK

 Europe seen slightly higher on US optimism  FTSEurofirst 300 index rises 0.2 percent  European equities hit multi-year high, leisure stocks lead

European shares advanced on Tuesday, with a major index climbing to its highest level in more than six years, supported by the travel and leisure sector that rose on talk. The STOXX Europe 600 Travel and Leisure index rose to its highest since 2007 and was up 1.2 percent by 1042 GMT, the best sectoral gainer in Europe, led by Intercontinental Hotel Group after media reported deal interest from an unidentified bidder in the . Shares in Intercontinental Hotel Group (IHG) surged 4.5 percent, the top performer on the pan-European FTSEurofirst 300 , which was up 0.2 percent at 1,378.51 points after climbing to its highest levels since early 2008. European shares are set for a slightly higher open on Wednesday, helped by another record high for the S&P 500 index overnight and modest buying in Asian markets. According to City Index, the FTSE is called up 1 point at 6,846, the German Dax is seen higher by 5 points at 9,946 and the French CAC is seen up 1 point at 4,531.Meanwhile, the leaders also warned Russia against possible further sanctions as tensions escalated across the east of Ukraine. Fierce battles raged in Donetsk with reports that dozens of pro-Russian rebel soldiers had lost their lives. This came despite relatively smooth elections for a new President in Kiev and discussions between the two sides regarding payment for gas. On the data front, a slew of economic releases are due on Wednesday. Home sales, consumer spending, and producer price data are due for France this morning. May unemployment figures for Germany are out at 9:00 a.m. London time and a euro zone business climate index is due at 10:00 a.m. London time. In earnings releases, Dutch international retailer Royal Ahold will release first-quarter earnings.

 ASIA

 Asia equities higher on US economic optimism, ECB easing hopes  China April industrial profits up 9.6% on-year

Asian stock markets rose on Wednesday following another record high for the S&P 500 index overnight and the prospect of fresh monetary stimulus in Europe. Japanese shares extended their winning streak into a sixth session but the pace of gains cooled as some investors booked profits on the Nikkei's previous seven-week closing high. Real estate developer Mitsui Fudosan fell 6 percent announcing plans to sell new shares of up to $3.2 billion to fund investments in office, retail

buildings and projects related to the 2020 Olympics. If Mitsui reaches its capital target, it would be the biggest offering this year. Semiconductor manufacturer Renesas jumped 3 percent after reported the firm is looking to sell a 55 percent stake in its display chip unit, Renesas SP Driver, to Synaptics instead of Apple. Australian shares hit a new one-month high of 5,534 points while the Australian dollar pared gains after touching a one-week high of $0.9278 overnight. Property group Stockland added 0.6 percent after raising its takeover offer for Australand Property to $1.87 billion, one month after threatening to walk away if its original bid was rejected. Australand shares fell 1 percent on the news. Woolworths eased 1 percent after the Australian Financial Review reported that the supermarket chain was eyeing a spin-off of its pubs business into a new division. Gold miners declined after bullion prices hit a new three-and-a-half-month low. Evolution Mining and Newcrest Mining lost over 3 percent each while Endeavor Mining fell nearly 5 percent. Mainland shares rebounded 0.3 percent to trade in sight of a new two-week high while the yuan hovered near an 18-month low against the greenback following disappointing data. April industrial profits rose 9.6 percent on year, slower than March's 10 percent gain. China Vanke jumped 1 percent after announcing that was looking to list in Hong Kong in the second half of June. The country's largest property developer also dismissed talk of a housing market but said that the "golden era" for property had passed. South Korean shares rebounded after closing at a two-week low in the previous session. Minutes from the Bank of Korea's recent policy meeting revealed some worries about weaker consumer spending. LG Electronics rallied more than 2 percent after unveiling its latest flagship smartphone, the G3, on Tuesday. Thailand's benchmark SET Index jumped 1 percent to levels not seen before the country's military staged a coup. Investors seemed to dismiss data showing that April exports fell nearly 1 percent on year, missing expectations for a 0.5 percent gain. Indian shares added 0.3 percent as investors await policy announcements from the country's new government.

Economic Release

 EUR

Event Previous Forecast

German Unemployment Change -25K -15K German Unemployment Rate 6.7% 6.7% Italian Business Confidence 99.9 99.6 M3 Money Supply YoY 1.1% 1.1% Consumer Confidence -7.1 -7.1

 US

Event Previous Forecast

MBA Mortgage applications 0.9% -

DOMESTIC MARKET

Stocks Last Close Change Volume SOLIDERE A 13.28 13.3 0.03 30079 SOLIDERE B 13.18 13.39 0.09 1500 SOLIDERE GDR 13.46 13.23 0.22 16865 HOLCIM 14.8 14.8 0.00 0 BLOM GDR 9.35 9.3 0.00 0 BLOM BANK 8.77 8.77 0.00 0 AUDI GDR 6.5 6.4 0.00 0 AUDI SARADAR 6.02 6.09 0.00 0 BYBLOS GDR 73 73 0.00 0 BYBLOS BANK 1.59 1.55 0.05 52366

FOREIGN EXCHANGE

FX Rates Spot NY Closing EUR 1.3635 1.3635 GBP 1.6795 1.6810 AUD 0.9259 0.9259 JPY 101.90 101.98 CHF 0.8968 0.8967 CAD 1.0850 1.0858 AMD 413.0100 413.0100 RUB 34.5221 34.4080 Commodities Spot Closing GOLD 1264.68 1264.9 SILVER 19.1065 19.07 CRUDE OIL 104.21 104.11

Market Summary

Commodities

Brent gains above $110 as US data boosts growth prospects Brent futures rose on Wednesday, holding above $110 a barrel on renewed optimism over steady demand growth in the world's top oil consumer the United States following healthy economic data, with supply disruption concerns providing additional support. Orders for long-lasting U.S. manufactured goods unexpectedly rose and consumer confidence perked up, underpinning risk assets and bolstering U.S. equity markets to another record close. Some analysts see the sharp gains in shares possibly prompting more profit-taking, however, and in turn dragging down oil. Brent crude gained 24 cents to $110.26 at 0357 GMT after ending 30 cents lower as some profits were booked following a long holiday weekend. U.S. oil gained 2 cents to $104.13 after losing 24 cents in the previous session. Investors are also awaiting commercial stockpile data from the United States to gauge the country's demand growth outlook. The survey forecast crude oil stocks to have increased 700,000 barrels last week. The survey is taken ahead of weekly inventory reports from the American Petroleum Institute (API), an industry group, and from the U.S. Department of Energy's Energy Information Administration (EIA).

Gold at 3-1/2 month low on strong US data, weak Chinese demand Gold fell to a fresh 3-1/2 month low on Wednesday, adding to sharp overnight losses, on fears slowing demand in top consumer China and as strong U.S. economic data blunted the metal's investment-hedge appeal. Spot gold dropped to $1,260.74 an ounce, its weakest since early February, before steadying at $1,264.65 by 0258 GMT. The metal slid 2.3 percent in the previous session - its biggest one-day drop since December. Gold had been largely steady in the last few weeks, with technical analysts citing gold's recent pennant chart formation, also known as a flag because of its triangular shape, which represents a brief consolidation with narrowing price ranges before the previous market move is resumed. Chinese demand failed to pick up on Wednesday despite the sharp overnight drop in prices. Prices for 99.99 percent purity gold on the Shanghai Gold Exchange were about $2 an ounce above global prices, little changed from Tuesday's premiums. The price differential between Chinese prices and global prices is considered a good measure of demand. Meanwhile, economic data showed that orders for long-lasting U.S. manufactured goods unexpectedly rose in April and consumer confidence perked up in May, supporting expectations of a rebound in economic growth. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 8.39 tonnes to 785.28 tonnes on Tuesday - the biggest daily inflow in at least 14 months. Among other precious metals, platinum also largely held on to losses from the previous session after the new South African mining minister pledged to mediate in a crippling miners’ strike now in its fifth month.

FX

Dollar Strengthens as Durable Goods Orders Gain in April

The dollar strengthened to a seven-week high after a report showed U.S. orders for durable goods unexpectedly rose in April. The euro headed for the biggest monthly drop since January versus the U.S. currency after European Central Bank President Mario Draghi signaled yesterday that policy makers are ready to expand stimulus. Hungary’s forint extended losses after the central bank cut interest rates to a record low. The Turkish lira fell the most in a week as consumer

confidence dropped. A gauge of volatility in Group of Seven currencies fell to almost the lowest in seven years. The Russian ruble was the best performer versus the dollar this month among 31 major currencies. New Zealand’s dollar dropped against all of its 16 major counterparts today as a measure of business confidence worsened. The yen is set to snap this month’s advance against its Group of 10 peers, trading patterns suggest, amid speculation the Bank of Japan will have to expand monetary easing to ensure it meets an inflation target.

Technical FX

EURUSD With the MACD below its zero line, a bearish condition, the risks are skewed for more downside. The broader potential remains for a test of support at 1.3562 and then 1.3477. Resistance is at 1.3758. USDJPY Strong support at 100.76 held well to prompt a sharp rebound last week. Resistance is at 102.36, a break above this would open the way to 103.02. GBPUSD The pair has been trading choppy since last week but the broader conditions are still bullish. Resistance is at 1.6882 ahead of 1.6996. Support is at 1.6732 ahead of 1.6665. USDCHF With bullish conditions in place, focus is on resistance at 0.898 , which has been tested yesterday. A closing break above this would be positive, opening the way to 0.9082 and then 0.9156. Support is at 0.8897. AUDUSD Focus is on main support at 0.9203 ahead of 0.9155, a close below 0.9155 will be negative triggering further downside. Resistance is at 0.9309 ahead of 0.9409. USDCAD Support is at 1.0814, a break below this will extend the bearish trend to the next main support at 1.0731. Resistance is at 1.0962. EURCHF As bullish conditions persist, there’s upside potential to resistance at 1.2285, a break above which would be positive, opening the way to 1.2395. Support is at 1.2191 ahead of 1.2163. EURGBP With bearish trend firmly in place, reflected by the MACD below its zero line and pattern of lower highs/lows, focus is on support at 0.8082. A break below this would expose 0.7960. Resistance is at 0.8184. EURJPY The broader potential is for extension of the weakness to the important support range at 136.23 and 135.33. Any upside in the interim will be limited, with resistance at 139.76 ahead of 140.95.

This report is published for information purposes only. The information herein has been compiled from, or based upon sources we believe to be reliable, but we do not guarantee or accept responsibility for its completeness and accuracy. This document should not be construed as a solicitation to take part in any investment, or as constituting any representation or warranty on our part. The consequences of any action taken on the basis of information contained herein are solely the responsibility of the recipient.

Creditbank - Treasury and Capital Markets Tel & Fax: +961 1 485 265 / 269