Australia Stock Market- Morning Report 02/06/2012
US non-farm payrolls (employment) rose by 243,000 in January, well ahead of forecasts centred on a gain of 150,000. The unemployment rate fell from 8.5pct to a three-year low of 8.3pct. The US ISM services index rose from 53.0 to an 11-month high of 56.8. And US factory orders rose by 1.1pct in December after a 2.2pct rise in November.
The Eurozone purchasing managers index for the services sector rose from 48.8 to 50.4 in January while the composite PMI rose from 48.3 to 50.4 - downplaying recession fears.
European shares posted the biggest one day gain since late December in response to better-than-expected US economic data. The FTSEurofirst index rose by 1.6pct, with the UK FTSE up 1.8pct while the German Dax rose by 1.7pct.
US sharemarkets posted strong gains in response to encouraging US and European economic data. The Dow Jones rose by 156 points or 1.2pct with the S&P 500 up by 1.5pct and the Nasdaq rose 46pts or 1.6pct to an 11-year high. Over the week the Dow rose 1.6pct with the S&P 500 up 2.2pct and the Nasdaq up 3.2pct.
US treasuries fell (yields higher) after economic data beat expectations and fears of a European recession eased. US 2yr yields rose 1pt to 0.238pct and US 10yr yields rose by 10pts to 1.924pct. Over the week US 2yr yields rose by 1.5pts and US 10yr yields rose by 2.4pts.
The US dollar was mixed against major currencies following the release of US and European economic data. The Euro fell from highs near US$1.3185 to US$1.3075, before recovering to end US trade near US$1.3150. The Aussie dollar rose from lows near US106.70 to US107.95c, ending US trade near US$107.65c. And the Japanese yen eased from 76.14 yen per US dollar to JPY76.73 and ended US trade at JPY76.55. This morning the Aussie is at US107.30c and the Euro at US$1.3110.
World crude oil rose on Friday after stronger-than-expected economic data raised hopes of stronger demand for energy products. Iranian leader, Ayatollah Ali Khamenei, also threatened retaliation for the West´s oil sanctions. The US Nymex oil rose by US$1.48 or 1.5pct to US$97.84 a barrel and London Brent crude rose by US$2.51 to US$114.58 a barrel. Over the week Nymex oil fell by 1.7pct while Brent rose by 2.8pct.
Base metal prices rose on Friday after firmer economic data and a weaker greenback spurred buying of commodities. Metals rose 1.0-2.8pct with tin up the least and lead doing best. Over the week metals were mixed with copper, tin and zinc up modestly but other metals were lower with lead down 3.4pct. And the gold price fell on Friday as demand for safe-haven assets eased and traders looked to book profits. The Comex April gold price fell by US$19.00 or 1.1pct to US$1,740.30 an ounce. Over the week the gold price rose by $8.10 or 0.5pct.
Ahead: In Australia, retail trade, the monthly inflation gauge and data on job ads are released. NZ markets are closed for a holiday. In the US, the monthly employment trends report is released.