Australian Stock Market Report - Morning - 04/17/2012

MORNING REPORT
(7am AEST)

US retail sales rose by a larger than expected 0.8pct in March after rising by 1.0pct in February. Forecasts centred on 0.3pct growth. Excluding autos and gasoline sales rose by 0.7pct.

US business inventories rose by 0.6pct to a record $1.58 trillion as auto dealers restocked to meet increased demand for motor vehicles. Business sales rose by a healthy 0.7pct in February after advancing by 0.4pct in the prior month.

European shares recorded healthy gains on Monday, as the upbeat US sales data offset concerns about Spain´s mounting debt costs. However Spain´s 10yr government bond yields broke above 6pct for the first time since December. The benchmark FTSEurofirst 300 index rose by 0.5pct with the German Dax up 0.6pct. The UK FTSE rose 0.3pct.

US sharemarkets were mixed on Monday. Robust retail sales data helped large-cap consumer stocks, like Procter & Gamble (up 1.5pct) and Wal-Mart (up 1.4pct), but a fall in Apple shares hurt the Nasdaq. Apple fell for the fifth straight session down 4.2pct on profit taking. At the close of trade, the Dow Jones was higher by 72pts or 0.6pct with the S&P 500 down by 0.1pct while the Nasdaq lost 23pts or 0.8pct.

US treasuries were mixed on Monday as concerns about rising Spanish borrowing costs increased demand for US government debt. However this was offset by the shift to equities following the improvement in US retails sales. US 2yr yields were flat at 0.27pct and US 10yr yields fell by 1pt to 1.98pct.

The Euro rallied in late trade against the greenback on largely technical trading after it held key support levels ahead of a Spanish debt auction later this week. The Euro rose from lows around US$1.2995 to highs near US$1.3145 and ended US trade at US$1.3140. The Aussie dollar rose from lows around US103.15c to US103.75c and ended US trade near US103.55c. And the Japanese yen traded between 80.81 yen per US dollar to JPY80.34 and was near JPY80.40 in late US trade.

Benchmark crude oil prices were mixed on Monday. Worries about Spain´s debt problems and ongoing tensions regarding Iran dominated market activity. US Nymex crude rose by US10c or 0.1pct to US$102.93 a barrel. London Brent crude fell by US$2.53 to US$118.68 a barrel.

Base metal prices were mixed on the London Metals Exchange on Monday. Copper touched a three-month low below $8,000 a tonne before recovering ground towards the end of the session. Euro zone jitters and downside risks to global growth dominated sentiment. And the gold price followed most commodities lower as investors looking for safe-haven assets turned to US bonds. June Comex gold futures price fell by US$10.50 or 0.6pct to US$1,649.70 an ounce.

Ahead: In Australia, RBA Board Minutes and motor vehicle sales figures are released. In the US, housing starts, industrial production and capacity utilisation data are released.