Australian Stock Market Report 18/2/2011
US consumer prices rose by a sizeable 0.4pct in January - above consensus. Over the year consumer prices were up 1.6 per cent. Core CPI (excluding food and energy) rose by a more sedate 0.2pct - however this was the biggest monthly rise since October 2009. The increase in the core measure was driven by a 1pct rise in the cost of apparel and a 2.2pct jump in airline fares. The annual rate of core inflation edged up from 0.9pct to 1.0pct.
[Get this delivered to your inbox for FREE. Subscribe to our daily Markets Newsletter.]
US Philadelphia Fed business activity index rose from 19.3 to 35.9 in February - marking the highest reading in 7 years. The Conference Board´s measure of leading indicators rose 0.1pct to 112.3 in January following a downwardly revised 0.8pct gain in December. Six of the ten indicators that make up the index were higher in January. US initial jobless claims rose by 25,000 to a larger than expected 410,000 in the past week.
European shares held onto recent gains on Thursday, after strong US manufacturing data. Banking stocks continued their run of gains with Barclays (up 0.4pct) reporting stronger than expected results. The broader FTSEurofirst index was unchanged similarly the UK FTSE remained flat and the German Dax was lower by 0.1pct.
US sharemarkets recovered from early losses on Thursday as investors bought on early dips. Energy shares were among the top performers following gains in the oil price. At the close of trade, the Dow Jones index was up 29pts or 0.2pct with the S&P 500 higher by 0.3pct and the Nasdaq gained 4pts or 0.3pct.
US treasuries rallied on Thursday (yields lower), as rising tensions in the Middle East added to the safe-haven bid for debt. Also supporting treasuries was the core inflation data which pointed to a tame inflationary environment over the coming year. US 2yr yields fell 8pts to 0.77pct and US 10yr yields lost 5pt to 3.57pct.
The US dollar fell against major currencies as tensions in the Middle East remained the driving factor. The Euro rallied from lows near US$1.3535 to US$1.3615 and was near US$1.3605 in late US trade. The Aussie dollar rose from lows around US100.20c to US101.30c, and was near US101.15c in late US trade. And the Japanese yen strengthened from lows near 83.70 yen per US dollar to highs around JPY83.15, and was around JPY83.30 in late US trade.
US crude oil prices rallied as rising tensions in the Middle East supported prices. The Nymex crude oil contract rose by US$1.37 or 1.6pct to US$86.36 a barrel. London Brent crude fell by US$1.18 to US$102.60 a barrel as investors unwound the spread again West Texas Crude.
Base metal prices eased on the London Metal Exchange on Friday with copper tumbling to a three week low. But the gold price rose on safe-haven demand as Middle East tensions escalated. The Comex gold futures price rose by US$10.00 an ounce to US$1,385.10.
Ahead: In Australia and the US no economic data is released.
More from Global Markets:
Newsletter: To receive Global Markets update, sign up here