Market may continue to be volatile as IMF revises growth forecast; David Jones to report today

<p>Market volatility continues with more European concerns following the Italian downgrade. There is no fundamental change to the global economic story but more bad press […]</p>

Market volatility continues with more European concerns following the Italian downgrade. There is no fundamental change to the global economic story but more bad press circulating, the latest on the IMF’s revised growth assumptions. 

They don’t make for a pleasing read but the share market, which usually precedes the economy by around six months, has plenty of bad news already priced in. As an example, the S&P500 shed 0.2% last night but in Sydney, index futures are pointing to 0.8% increase this morning. 

Asian markets have already been heavily sold off so the next few trading sessions could see out performance. All eyes are also on the US Fed’s meeting this week, the outcome which will be closely watched by the market. QE3 is a strong possibility and combined with President Obama’s tax and jobs package, could be enough to fend off another recession in the world’s largest economy.  

In Australian corporate news, retailer David Jones is expected to report today, with a lot of bad news already factored in to the result. Market is watching to see if the 1H guidance for 2012 for a decline of 15-20% is upgraded slightly. 

Also in retail, Kathmandu’s profit looks in line with expectations, EBIT at the midpoint of NZ$63-65m guidance. The group is forecasting another year of profit growth, despite the retail environment, mainly driven by new store openings. Market will be happy. 

In resources, Rio Tinto’s warning on commodities could see some more downside in base metal prices, copper now well below the US$4/lb level, looking at finding a bottom, next stop possibly US$3.60-65. Buying mining stocks on low PE’s could be problematic. 

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