Australian Stock Market Report 06/02/2011
The US ISM manufacturing gauge slumped from 60.4 to 53.5 in May - the lowest reading since September 2009. The ADP employment index showed that private employers added just 38,000 workers in May - well below forecasts of a 175,000 increase and the weakest result since September 2010. Planned job cuts rose by 1.8pct to 37,135 in May according to the Challenger survey. But construction spending rose by 0.4pct in April - the largest rise since October 2010.
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Rating agency Moody´s has downgraded the credit rating of Greece three notches from B1 to Caa1 with a negative outlook.
European shares slumped on Wednesday as investors digested weak US economic data. But mining stocks were mixed with BHP Billiton down 0.5pct in London trade with Rio Tinto up 0.2pct. The FTSEurofirst index fell by 1.0pct with the German Dax down by 1.1pct and the UK FTSE fell by 1.0pct.
US sharemarkets slumped on Wednesday, recording the biggest fall since August 2010, as investors fretted whether weak economic data meant that the recovery was at risk. The Dow Jones fell by 279pts or 2.2pct with the S&P 500 down by 2.3pct and the Nasdaq fell by 66pts or 2.3pct.
US treasury prices soared on Wednesday (yields lower) as new data raised doubts about the longevity of the economic recovery. US 2yr yields fell 4pts to 0.44pct and US 10yr yields fell by 12pts to a six-month low of 2.95pct.
The US dollar lifted against the Euro and commodity currencies as investors embraced safe-haven assets. The Euro fell from highs of US$1.4455 to US$1.4320, ending US trade near the day´s lows. The Aussie dollar fell from highs near US107.50c to US106.00c, also ending US trade near its lows. But the Japanese yen strengthened from 81.45 yen per US dollar to just below JPY81.70, before ending US trade near JPY80.95.
Crude oil prices fell sharply on Wednesday as weaker-than-expected global economic data raised concerns about future energy demand. Other data released on Wednesday revealed that retail gasoline demand last week was lower than a year ago. The Nymex crude oil contract fell by US$2.41 or 2.3pct to US$100.29 a barrel and London Brent crude fell by US$2.20 a barrel to US$114.53.
Base metal prices fell on the London Metal Exchange on Wednesday in response to weaker-than-expected readings on the manufacturing sector in the US, Europe and China. Metals fell 0.4-1.5pct with nickel faring the worst. But the gold price lifted modestly on safe-haven demand with Comex gold futures up by US$6.40 an ounce to US$1,543.20.
Ahead: In Australia, retail trade and international trade data are due for release. In the US, data on weekly jobless claims and factory orders are released.
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