Australia Stock Market- Morning Report 03/08/2012
The US ADP National Employment index showed that 216,000 new private sector jobs were created in February, close to market forecasts. In Germany, factory orders fell by 2.7pct in January taking the annual contraction to 4.9pct. A sharp fall in foreign orders was the main driver of the weakness: foreign orders fell by 5.5pct, while domestic orders rose by 0.9pct.
The Wall Street Journal claims that the Federal Reserve is considering a novel approach of sterilised bond purchases if the economy requires more stimulus.
European shares posted modest gains on Wednesday. Investors are hopeful that private sector creditors will agree to the Greek debt swap deal while the solid US jobs report added to the positive tone. Luxury goods makers rose on hopes that China will cut import taxes on luxury goods to boost consumption. The benchmark FTSEurofirst 300 index rose by 0.6pct with the UK FTSE up 0.4pct while the German Dax gained 0.6pct.
US sharemarkets recovered on Wednesday, supported by data showing solid job growth. Apple also released its latest iPad late in the afternoon and its share price was little changed on the news. With just over an hour of trade to go, the Dow Jones index was higher by 78pts or 0.6pct. The S&P 500 rose by 0.6pct and the Nasdaq gained 25pts or 0.87pct.
US treasuries eased on Wednesday (yields higher) as investors drifted back to equities and commodities and away from ´´safe haven´´ government bonds. Confidence about a Greek debt deal and solid job growth added to the flows away from bonds. The Federal Reserve bought $1.969 billion of Treasuries maturing February 2036 through May 2041. US 2yr yields rose by 2pts to 0.30pct and US 10yr yields rose by 1pt to 1.957pct.
The Euro and commodity currencies rose sharply against the greenback in US trade on Wednesday on hopes that the Greek debt deal would succeed. The Euro rose from lows near US$1.3100 to around US$1.3160, and was near US$1.3135 at the close in the US. The Aussie dollar rose from lows around US105.30c to near US105.85c, and was close to US105.84c at the close of US trade. But the Japanese yen eased from 80.60 yen per US dollar to JPY81.12 and was near JPY81.12 in late US trade.
Benchmark crude oil prices rose on Wednesday. US jobs data was better-than-expected, there were hopes that the Greek debt swap deal would work and the US dollar eased against the Euro. US Nymex rose by US$1.46 or 1.4pct to US$106.16 a barrel while London Brent crude rose by US$1.98 to US$123.96 a barrel.
Base metal prices were generally higher on Thursday as investors drifted back to equities and commodities markets. Lead rose 1.1pct and nickel gained 0.8pct but aluminium fell by 1.2pct and tin lost 0.3pct. The gold price also rose in line with other commodities as the US dollar softened with the April Comex gold price up by US$11.70 or 0.7pct to US$1,683.80 an ounce.
Ahead: In Australia, the monthly labour market figures are released. In the US, weekly jobless claims data is released with the Challenger job layoff series.