Australian Stock Market Report - Morning 04/07/2011
The Chicago Fed Midwest manufacturing index rose from 82.2 to 83.3 in February. An array of sub-sectors recorded healthy gains including auto´s, steel, and machinery manufacturers.
Portugal´s caretaker government confirmed that it had decided to seek financing from the European Union. Portugal becomes the third member of the euro zone to seek a rescue after Greece and Ireland. Euro zone officials said Portugal is likely to need between €60 and €80 billion over the space of three years.
European shares rose on Wednesday. Banking stocks led the rally as investors brushed aside Portugal´s debt issues and looked for bargains in the sector. Despite the three-week rally European stocks remained cheap from a historical sense. Europe´s broad STOXX 600 index carries a forward price-to-earnings ratio of 10.6, well below its 10yr average of 13.6. The FTSEurofirst index rose by 0.3pct, while the UK FTSE gained 0.6pct, and the German Dax also rose 0.6pct.
US sharemarkets rose on Wednesday as investors continued to add to positions ahead of corporate earnings due next week. The S&P 500 managed to break through its resistance levels at 1,333 but volumes were relatively light. The Dow Jones rose 33pts or 0.3pct, while the S&P500 rose 0.2pct and the Nasdaq gained 9pts or 0.3pct.
US treasuries fell on Wednesday (yields higher) for a second straight session. Rising energy prices and the anticipated rise in inflationary pressures drove investor concerns. US 2yr yields rose by 3pts to 0.84pct and US 10yr yields rose 7pts to 3.55pct.
The greenback fell to a 14-month low against the Euro on mounting speculation that the ECB will signal further interest rate rises following an expected increase when they meet tonight. The Euro rose from lows near US$1.4260 to S$1.4345, ending US trade around US$1.4330. The Aussie dollar rose from US103.50c to almost US104.50c, ending US trade near US104.45c. And the Japanese yen eased from 84.80 yen per US dollar to JPY85.45, ending US trade near its lows.
Benchmark crude oil prices were modestly higher in a volatile trading session on Wednesday. Supply concerns continued to dominate price action. Earlier prices had dipped after the EIA energy report showed that US crude stockpiles rose by 1.95 million barrels last week - in line with forecasts. The Nymex crude oil contract rose by US49c or 0.5pct to US$108.83 a barrel. And London Brent crude hit fresh 30-month highs, up US8c to US$122.30 a barrel.
Base metal prices recorded solid gains on the London Metal Exchange on Wednesday. Nickel was the standout up 4.1pct while other metals gained between 1-2.3pct. The gold price lifted to fresh record highs on US dollar weakness. Comex gold futures closed up US$6 an ounce or 0.4pct to US$1,458.50.
Ahead: In Australia, employment data is released. In the US, consumer credit is released.
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