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Morning Market Report

A bit of an unsteady day on worldwide markets following employment reports.

The market is down 27 points.The Dow Jones was down 160 at 16,412  — the market fell steadily over the day following the employment report, which was slightly below expectations. Stocks which had previously had strong upward momentum in the technology and biotech sectors were the most heavily sold and there was some technically based selling. Volume was above average in a 240 point range.

US Employment  — 192,000 new jobs were created, slightly less than forecast. The unemployment rate remained unchanged at 6.7%. The number was generally well received — it doesn’t change Fed tapering, but still signals the economy is expanding gradually.

European shares were generally stronger  — the UK FTSE rose 0.70%, the French CAC rose 0.79% and the German DAX was up 0.70%. ECB vice president Vitor Constancio reiterated that an ECB bond-buying, or quantitative easing, program had been discussed at the monetary policy meeting, although not in detail.

The Australian dollar was stronger and is currently trading at US92.81c.

Gold rose US$18.80 or 1.46% to US$1,303.20 an ounce.

Base metals were generally stronger but copper fell 0.37% to USD 6619 a tonne as mining operations continued undisrupted by two earthquakes which had put production at risk.

US earnings season for the first quarter of 2014 starts this week  — S&P 500 earnings are expected to grow 1.2% and revenue is expected to increase just 2.7% according to Reuters. Alcoa, JPMorgan Chase, and Wells Fargo are the major names posting results this week. The weather is expected to be a key theme — there here have been almost six negative pre-announcements for every positive one, according to Thomson Reuters.

Lots of Fed Speakthis week  — Tonight is St Louis Fed Governor James Bullard, Tuesday Minneapolis Narayana Kocherlakota and Philadelphia Charles Plosser, Wednesday Chicago Charles Evans and board Governor Daniel Tarullo speaks, and Evans speaks again on Thursday.

Ex-dividend today —  HVN (6c)

STORIES

  • The jobs number in the US on Friday wasn’t really that bad, a bit below expectations (192,000 jobs) but close enough to the 192,000 to 200,000 expected. The sell-off appears to have come from the technology (and biotech) stocks which are hardly the logical victims of a jobs based disappointment. The biggest tech fallers included Facebook down 4.56%, Google down 4.59%, Yahoo down 4.2%, Netflix down 4.9%, Amazon down 3.3%.
  • The IMF releases its updated global economic outlook this week. The global GDP number is expected to be up from 3.0% to 3.7% although before you get too interested, it is just another economist’s forecast and the IMF being in the global headlights is very unlikely to say anything radical.
  • The bank results season kicks off this week with the Bank of Queensland (BOQ 1275c) interim results on Friday, although we’ll have to wait until next month before the major banks report. There has been a bit of talk about a bid for BOQ from one of the majors. The stock is on a six-year high. It hit an all-time high of 1872c in 2007.
  • Aveo Group (AOG) — Continuing strong sales from its Retirement Established Business division. Residential Communities and Apartment division has resulted in cash flows from Aveo’s operating activities in financial year 2014 to be stronger than financial year 2013. It has also reaffirmed guidance that financial year 2014 underlying profit is forecast to be up on the financial year 2013 result.
  • St Barbara (SBM) — Is in a trading halt while it assesses the damage to Gold Ridge Operations from the flood disaster in the Solomon Islands.

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