Australian Stock Market Report - Morning 09/01/2011
The ISM-Chicago purchasing managers index fell from 58.5 to 56.5 in August - the lowest levels since November 2009. The new orders sub component recorded modest weakness. US ADP private sector employment rose by 91,000 jobs in August.
US factory orders rose by a surprising 2.4pct in July as demand for transportation equipment surged. Excluding transportation orders rose by 0.9pct. Orders for non-defence capital goods ex aircraft - a close proxy for business spending - fell 0.9pct in July.
European shares rose again on Wednesday as investors continued to bet on hopes that the US Federal Reserve would provide an injection of fresh stimulus. Mining stocks were among the best performers with the STOXX Europe 600 basic resources index rising 4.1pct. Shares in BHP Billiton gained 3.1pct while Rio Tinto rose 3.5pct in London trade. The FTSEurofirst index rose 2.9pct, with the German Dax up 2.5pct and the UK FTSE higher by 2.4pct. For the month the FTSEurofirst index fell 10.6pct - its worst monthly performance since October 2008.
US sharemarkets briefly fell into negative territory before rallying in the last hour of trade on Wednesday. Banking stocks led the late surge. The better than expected economic data and expectations of further Fed stimulus continued to be the main drivers. The Dow rose almost 54pts or 0.5pct. The S&P 500 closed 0.5pct higher and the Nasdaq gained 3pts or 0.1pct. For the month of August the Dow fell 4.4pct, the Nasdaq slumped 6.4pct and the S&P 500 lost 5.7pct.
US treasury prices fell on Wednesday (yields higher) as the upbeat economic data soothed fears that the US economy was falling back into recession. US 2yr yields rose by 1pt to 0.207pct and US 10yr yields rose 5pts to 2.231pct.
The US dollar rallied against the Euro after the better than expected US economic data. The Euro fell from highs near US$1.4465 to lows near US$1.4360 before ending US trade near US$1.4370. The Aussie dollar rose from lows around US106.60c to US107.20c, ending US trade near US106.90c. And the Japanese yen held between 76.80 yen per US dollar and JPY76.45, ending US trade at JPY76.55.
US crude oil prices fell modestly after the release of the weekly EIA energy report. US crude stockpiles rose by a surprising 5.28 million barrels last week against expectations of a 400,000 barrel build. Nymex crude oil fell by US9c or 0.1pct to US$88.81 a barrel and London Brent crude rose by US83c to US$114.85 a barrel. Nymex crude oil fell 7.2pct in August.
Base metal prices rose on the London Metal Exchange on Wednesday in response to a weaker greenback and improved risk appetite. Metals rose between 0.3-1.8pct. And the gold price was stronger in line with other commodities. Comex December gold gained US$1.90 an ounce or 0.1pct to US$1,831.70.
Ahead: In Australia, retails sales and capital expenditure data are set for release. In the US, vehicle sales, construction spending and the ISM manufacturing survey are released.