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Morning Market Report

Results season wasn’t one to look forward to for companies outside the banking and mining sectors.

The market is up 44 points. The Dow Jones was down 10 at 16,256  — The market dropped at the open and was down as much as 66 before recovering throughout the day. Volume was just above average and the market traded in a 120 point range.

The bounce resulted from interest in recently hit social media and internet shares. Momentum stocks including Google +3.11%, Facebook 2.18%, LinkedIn +5.92%, Netflix +3.22% and Amazon.com +2.93% were among those rising. Energy and materials stocks also performed well following gains in commodity prices and oil. There was little economic data and markets were awaiting earnings results to be released after the market close.

The Australian dollar was stronger and is currently trading at US93.61c.

Gold rose US$10.70 or 0.82% to US$1,308.70 an ounce.

Oil rose 2.11% to US$102.56 a barrel.

Iron Ore was up US$1.00 to $118.20 a tonne.

Base metals were generally stronger  — Zinc was up 1.55%. Copper was flat.

Australian economic data - The Westpac/Melbourne Institute consumer sentiment index and housing finance are due today. Employment data is tomorrow — economists are expecting 5,000 jobs to be lost and the unemployment rate to rise to 6.1%.

STORIES:

  • David Jones (DJS 319c) —  Has received a $2.15 billion takeover bid from South Africa’s Woolworths Holdings. DJS has come out and said their board is recommending shareholders accept Woolworths’ offer of 400c which represents a 25% premium to DJS closing price on Wednesday of 319c.
  • The IMF “World Economic Outlook” forecast the global recovery would strengthen this year as output in richer nations picked up, but it warned of rising risks in emerging economies. Output should rise 3.6% this year, slightly lower than forecast in January, and grow 3.9% next year. But there was an increasing divergence among countries. It doesn’t expect the US Fed to raise interest rates until the third quarter of next year. The IMF also repeated warnings about euro zone inflation and ees a 20% chance of deflation. The US is expected to grow by 2.8%, China by 7.5% and Australia by 2.6%.
  • Russia’s Foreign Ministry has warned of the possibility of a civil war if Ukraine did not stop its “military preparations.” Pro-Moscow protesters reportedly seized weapons in one city and declared a separatist republic in another, moves Kiev described as a Russian-orchestrated plan to justify an invasion.
  • The Bank of Japan left its current asset purchase plan unchanged at yesterday’s meeting, agreeing to expand the monetary base by 60-70 trillion yen per year. Further stimulus is expected to by July to offset the effects of the increased consumption tax and move inflation closer to the 2%  BoJ target.
  • Results for the non-bank, non-miners —  the recent results season wasn’t so great for companies outside the major banks or mining sector. A KPMG analysis for the AFR of 41 companies shows profit fell 15% to $36b for the December half, the worst result since December 2009. Revenue and operating cash flow were also weaker.

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