Australian Stock Market Report – Morning 3/18/14

US MORNING REPORT
(7am AEDT)

In US economic data, industrial production rose by 0.6% in February, above forecasts for a 0.1% gain. The New York Federal Reserve manufacturing index rose from 4.48 to 5.61 in March, near market forecasts. And the National Association of Home Builders index rose from 46 to 47 in March, short of forecasts centred near 50.

European shares rose on Monday with investors relieved that the referendum in Crimea passed without violence or major disturbances. Higher US production data also boosted sentiment. The FTSEurofirst 300 index rose by 1.0% on Monday with the UK FTSE up by 0.6% and the German Dax was higher by 1.4%. Mining shares were firmer in London trade with shares in both BHP Billiton and Rio Tinto up by 1.2%.

US sharemarkets rose on Monday. Investors were comforted by an uneventful Crimean referendum and stronger-than-expected industrial production. Chinese e-commerce company, Alibaba, announced its intention to seek a US initial public offering, boosting shares of key stakeholder, Yahoo, by 4.0%. After being up 204 points, the Dow Jones index closed higher by 181 points or 1.1%. The S&P 500 was up by 1.0% while the Nasdaq gained 34.5 points or 0.8%.

US longer-term treasury prices were weaker (yields higher) after the Crimean referendum as investors shifted funds from safe-haven government bonds into equities. US 2 year yields rose 1 point to 0.36% while US 10 year yields rose by 3 points to 2.70%.

The Euro and commodity currencies were generally firmer against the greenback on Monday while the Japanese yen eased. The Euro rose from lows near US$1.3880 to US$1.3945 and ended US trade around US$1.3925. The Aussie dollar rose from lows near US90.50c to highs near US90.95c and was around US90.80c at the US close. And the Japanese yen held between 101.42 yen per US dollar and JPY101.85 and was near JPY101.75 at the US close.

World oil prices eased on Monday as investors concluded that there was a reduced likelihood about major supply disruptions in Europe following the Crimean election. Investors also conclude that the world is well supplied with oil at present. Brent crude fell by US$1.97 or 1.8% to US$106.24 a barrel while US Nymex crude fell by US81c or 0.8% to US$98.08 a barrel.

Base metal prices were generally higher by up to 0.9% on the London Metal Exchange on Monday. The exceptions were zinc, down 1.3%, and aluminium, down 1.0%. The Comex gold futures price eased from six-month highs on Monday, down by US$6.10 an ounce or 0.4% to US$1,372.90 per ounce. Iron ore fell by US50c or 0.5% on Monday to US$109.60 a tonne.

Ahead: In Australia data on imports is issued as well as minutes of the last Reserve Bank Board meeting. In the US, the consumer price index and housing starts data are released.

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