Australia Stock Market- Morning Report 02/15/2012
US advance retail sales rose by just 0.4pct in January after a revised flat reading for December (previously +0.1pct). The main drag on the January result was auto sales which fell 1.1pct partly due to discounting. US business inventories rose by 0.4pct in December, while sales rose at a 0.7pct monthly pace - the largest rise since July 2011.
European shares fell on Tuesday following the weaker than expected US retail sales data. In addition Moody´s downgraded six euro zone countries including Spain, Italy and Portugal. However losses were limited by a rise in the German ZEW index of consumer sentiment. The economic sentiment reading surged from -21.6 to +5.4in February - a ten-month high. The FTSEurofirst index fell by 0.2pct, with the UK FTSE down 0.1pct while the German Dax gave back 0.2pct.
US sharemarkets rallied into the close on Tuesday, after speculation that Greece´s conservative party will commit to austerity measures. In early trade, investors were happy to cash in stocks that have led the gains this year after the disappointing US economic data. Financial stocks were weaker with the S&P Financial Index down 1pct, while the Basic Materials Index lost 1.3pct. At the close of trade, the Dow Jones higher by 4 points with the S&P 500 down by 0.1pct while the Nasdaq was flat.
US treasuries rallied on Tuesday (yields lower) as the disappointing US economic data resulted in investors being more cautious on the US economic recovery. US 2yr yields were flat at 0.29pct and US 10yr yields fell 4pts to 1.941pct.
The US dollar rallied against the Euro after Moody´s downgraded six European countries and warned it may cut ratings for three more countries. The Euro fell from highs near US$1.3210 to US$1.3075, and was near US$1.3120 in late US trade. The Aussie dollar fell from highs around US107.25c to US106.25c, and was near US106.85c in late US trade. And the Japanese yen eased from 77.80 yen per US dollar to JPY78.50 and was near JPY78.45 in late US trade.
US crude oil prices fell on Tuesday, weighed down by the weaker-than-expected US retail sales data. However Brent crude prices recorded modest gains as the March contract neared expiry and supply threats in the Middle East kept the contract well bid. Nymex oil fell by US17c or 0.2pct to US$100.74 a barrel while London Brent crude rose by US24c to US$118.17 a barrel.
Base metal prices were mostly weaker on Tuesday with the exception of Aluminium which rose 0.2pct. The weaker Euro currency was the main driver. And the gold price fell for the third straight session on Tuesday with Comex April gold down US$7.20 to US$1,717.70 an ounce.
Ahead: In Australia, motor vehicle sales, lending finance, and consumer sentiment are released. Domino´s Pizza, Westfield, Fortescue, Dexus Property, and CBA are amongst those reporting earnings. In the US, industrial production, NAHB housing market index and FOMC minutes are scheduled for release.