Morning Market Report

The market is down 14 points. The Dow Jones was up 87 points at 16,535  — the market rose throughout the morning in a volatile session and range-traded throughout the afternoon. Dominating factors were good earnings results, continued M&A news and a rebound in momentum stocks. Trading volume was average in a 110 point range.

The Dow is within 100 points from its all-time high of 16,631.63.

US earnings were generally better than expected in a season which has been neither very bad nor particularly good. 55% of S&P 500 companies have now reported first quarter earnings. Thomson Reuters data indicates 68% have beaten estimates while 22% have missed. Merck beat estimates after confirmation yesterday Britain’s Reckitt Benckiser could acquire its consumer health business. The energy sector was also supported by above-consensus earnings from BP and Valero. Twitter was down more than 10% in after-hours trade after disappointing growth.

The FOMC meeting has started —  a fourth US$10 billion reduction in asset purchases is expected to be announced at its conclusion tomorrow, to US$45 billion a month.

US economic data was mixed —  consumer sentiment was below expectations (although the second highest reading since January 2008) but home prices beat forecasts.

European markets were stronger —  The UK FTSE was up 1.04%, the French CAC was up 0.83% and the German DAX was 1.46% higher. Shares rose after some strong earnings from Nokia and Deutsche Bank, and BP also announced an increase in dividend. Peugeot Citroen launched the second part of a 3 billion euro ($4.2 billion) capital increase to fund its recovery plan and tie-up with China’s Dongfeng. Its shares rose 10%.

The Aussie dollar was stronger andis currently trading at US92.68c.

Oil rose US$0.44 or 0.44% to US$101.28 a barrel on concerns about supply disruptions following a heightening of tensions in Libya.

Iron ore fell US$0.30 to US$108.30 a tonne.

Base metals were weaker  —  lead fell 1.29%, aluminium fell 0.94% and zinc fell 0.57%.

US earnings —  Twitter — down 10.56% in after-hours trade, Ebay — down 4.20% in after-hours trade, Ameriprise financial — up 5.84%

Global economic data  — UK first quarter growth was 0.8%, slightly less than forecast; Spanish unemployment fell to 25.9%, down from 26.0% but above market expectations; European economic sentiment index from the EC showed a slip in the euro area but a rise in the European Union as a whole.


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