Australian Stock Market Report 5/3/2011
The US ISM manufacturing index eased from 61.2 to 60.4 in April but ahead of economist forecasts centred on a result near 60. All key components softened, however the measure of input prices hit a 3-year high. Meanwhile US construction spending rose by 1.4pct in March after falling 2.4pct in February. It was the largest gain in spending in 11 months and well ahead of forecasts centred on a 0.4pct gain.
European shares rose for the eighth straight day to two-month highs on Monday in thin trade constrained by holidays in key centres including the UK. Investors were encouraged by the news of the death of Osama bin Laden. The FTSEurofirst index rose by 0.02pct while the German Dax lifted by 0.2pct and the French CAC 40 rose 0.1pct.
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US sharemarkets eased modestly on Monday. While investors were initially buoyed by the news of bin Laden´s death, they were quick to focus on the realities of the economy and threat of revenge terrorist attacks by al Qaeda. The Dow Jones index fell by 3pts or less than 0.1pct from 3-year highs. The S&P 500 fell by 0.2pct and the Nasdaq eased by 9.5pts or 0.3pct from 10-1/2 year highs.
US treasuries mirrored trading action on equity markets. While prices fell initially (yields higher) on news of bin Laden´s death, the focus quickly returned to the on-going war against terror, economic fundamentals and upcoming corporate bond issuance. US 2yr yields fell by 2pts to 0.605pct and US 10yr yields fell by 2pts to 3.28pct.
Major currencies rose against the greenback in European trade before giving back gains in US trade. The Euro traded from lows near US$1.4785 to US$1.4900, before ending US trade near US$1.4820. The Aussie dollar traded from lows near US109.30c to around US110.10c before ending US trade near the day´s lows at US109.35c. And the Japanese yen lifted from near 81.60 yen per US dollar to JPY81.05, before closing US trade at JPY81.25.
US and European crude oil prices eased modestly in choppy trade on Monday. While investors were comforted by the news of bin Laden´s death, there were concerns about the risk of revenge attacks by al Qaeda. The Nymex crude oil contract fell by US41c or 0.4pct to US$113.52 a barrel after hitting US$114.83 at one point. London Brent crude fell by US77c to US$125.12 a barrel.
The London Metal Exchange was closed on Monday. The last trade occurred last Thursday where metal prices rose modestly, the exception being lead and copper, down up to 0.5pct. Gold advanced slightly but silver eased as investors weighed the consequences of bin Laden´s death. The Comex gold futures price rose by US70c an ounce to US$1,557.10 after ranging from US$1,540.30 to $1,577.40 an ounce. Silver fell by 5.2pct to US$46.08 an ounce.
Ahead: In Australia, the Reserve Bank Board meets to decide interest rate settings. ANZ releases its first half profit result. In the US, data on car sales, weekly chain store sales and durable goods orders are released.
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