Australian Stock Market Report - Morning 08/16/2011
The US Empire State manufacturing index fell from minus 3.76 to minus 7.72 in August. The National Association of Home Builders index was stable at +15 in August. Net capital outflow from the US totalled US$29.5 billion in June, compared with an outflow of US$48.8bn in May. China increased its holdings of Treasuries by US$5.7bn in June to US$1.166 trillion.
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European shares posted modest gains on Monday. Shares in Nokia rose by 9.1pct on hopes that another tech company may be interested in acquiring a stake in the Finnish phone company. This followed news that Google offered to buy Motorola Mobility. Mining shares were higher with BHP Billiton up 1.1pct with Rio Tinto up 0.2pct. The FTSEurofirst index rose by 0.1pct while the German Dax was up by 0.4pct and the UK FTSE rose 0.6pct.
US sharemarkets posted solid gains on Monday. Investors continued to search for value amongst stocks hit hard by the global sharemarket sell-off over the past fortnight. Takeover activity also added to the positive tone with Google offering to buy Motorola Mobility for US$12.5 billion. Shares in Motorola Mobility rose by 55.8pct. The Dow Jones rose by almost 214pts or 1.9pct with the S&P 500 up by 2.2pct and the Nasdaq lifted 47pts or 1.9pct.
US long-term treasuries eased on Monday (yields higher) as investors drifted back to equities and commodities in preference for safe-haven government bonds. US 2yr yields were flat at 0.195pct and US 10yr yields rose by 5pts to 2.31pct.
The US dollar fell against the Euro and commodity currencies in afternoon European trade and consolidated the gains in the US session. The Euro rose from lows near US$1.4260 to US$1.4475, ending the US session at US$1.4440. The Aussie dollar rose from lows around US103.85c to US105.10c, ending US trade near US105.00c. And the Japanese yen held between 76.55 yen per US dollar and JPY76.90, ending US trade near JPY76.85.
Global crude oil prices rose in light trade on Monday in response to a weaker greenback and improved confidence by global investors. Nymex crude oil rose by US$2.50 or 2.9pct to US$87.88 a barrel and London Brent crude rose by US$1.88 to US$109.91 a barrel.
Base metal prices were mixed on the London Metal Exchange on Monday. Aluminium fell 1.1pct, tin lost 1.0pct and nickel fell 0.5pct but other metals rose between 0.3-0.9pct. But the gold price rebounded in line with oil as the US dollar fell. Comex December gold rose by US$15.40 an ounce to US$1,758.00.
Ahead: In Australia, the Reserve Bank releases minutes of its August 2 Board meeting. Westpac releases a trading update. Earnings are expected from OneSteel, Primary Health Care, Carsales.com, Tabcorp, OZ Minerals and GWA group. In the US, data on housing starts and industrial production are released