Australia Stock Market- Morning Report 03/02/2012
The US ISM manufacturing survey surprised negatively in February dropping from 54.1to 52.4. The result was a clear divergence from most of the regional manufacturing surveys which had risen and surprised positively in February. Personal incomes edged up by 0.3pct in January, while spending gained by just 0.2pct. US Initial jobless claims inched lower from 353,000 to 351,000 last week - holding near four year lows.
European shares rallied on Thursday, after Euro zone sovereign yields fell further - boosted by the cheap funding available to Euro zone banks. Spain sold €4.5 billion of 3-5 year bonds attracting strong demand at lower yields across the board. Similarly a range of French debt auctions resulted in yields falling sharply. The Eurozone banking index rose 2.6pct. Italian banks led the gains after news that Italian lenders took a quarter of the €529.5 billion borrowed under the ECB second 3-year LTRO. The FTSEurofirst 300 index rose 1.1pct. The UK FTSE gained 1pct and the German Dax rose 1.3pct.
US sharemarkets rallied on Thursday reversing declines from the prior session. The upbeat labour market data and solid February sales amongst retailers encouraged buying. The S&P retail index gained 0.8pct while the financial sector rose 1.2pct. The VIX or ´´fear gauge´´ dropped 5.8pct. At the close of trade the Dow was up 28pts or 0.2pct. While the S&P 500 rose 0.6pct and the Nasdaq was up by 23pts or 0.7pct.
US long-term treasury prices fell on Thursday as traders readjusted views that the likelihood of another round of quantitative easing would be pushed back. In addition the improvement in risk appetite resulted in investors switching out of equities. US 2yr yields were flat at 0.297pct and US 10yr yields rose by 6pts to 2.033pct.
The Euro eased against the Greenback in overnight trade, driven by the ECB cash infusion and lower expectations of another round of US stimulus. The Euro fell from US$1.3355 to around US$1.3285 and was near US$1.3310 in late US trade. The Aussie dollar rallied from lows near US107.20c to near US108.05c, and was at US107.90c in late US trade. And the Japanese yen held between 80.85 yen per US dollar and JPY81.30 and was near JPY81.10 in late US trade.
US crude oil prices recorded healthy gains on Thursday after the Chinese PMI data recorded a larger than expected rise in export orders for the big manufacturers. Supply tensions in the Middle East also supported the bid for oil. US Nymex rose by US$1.77 or 1.7pct to US$108.84 a barrel while London Brent crude rose by US$3.54 to US$126.20 a barrel.
Base metal prices were mostly higher on Thursday with the exception of Zinc which fell 0.4pct. The gold price rose after the prior session’s sharp fall. Comex gold gained $10.90 or 0.6pct to US$1,722.20 an ounce.
Ahead: In Australia and the US no economic data is scheduled for release.