Australian Stock Market Report – Morning 2/17/14

US MORNING REPORT
(5.15am AEDT)

In US economic data, industrial production fell by 0.3% in January, short of forecasts for a 0.3% gain, but a result blamed on the severe winter weather. Import prices rose 0.1% in January and export prices rose by 0.2%. Consumer sentiment was unchanged at 81.2 in February.

China reported record new credit in January with aggregate financing, the broadest measure of credit, of 2.58 trillion yuan.

European shares rose on Friday. Investors reacted positively to German and French economic data and the make-up of the new Italian Government. The FTSEurofirst 300 index rose by 0.5% with the UK FTSE up by 0.1% while the German Dax gained 0.7%. Italy´s FTSE MIB index rose by 1.6%. Mining shares were also stronger in London trade with BHP Billiton shares up by 0.9% while Rio Tinto gained 0.5%.

US sharemarkets recorded broad-based gains on Friday with investors ignoring economic data and taking a positive view on future prospects. At the close of trade, the US Dow Jones was up almost 127 points or 0.8% with the S&P 500 up by 0.5% while the Nasdaq gained 3.4 points or 0.1%. Over the week both the Dow Jones and S&P 500 rose by 2.3% while the Nasdaq rose by 2.9%.

US long-term treasury prices fell slightly on Friday (yields higher) as investors shifted funds into equities. US 2 year yields fell by 1 point to 0.315% while US 10 year yields rose by 1 point to 2.74%. Over the week US 2 year yields rose by around 1 point and US 10 year yields rose by 8 points.

Major currencies were largely steady against the greenback over the European and US sessions but the Aussie dollar rose half a cent. The Euro held between US$1.3675 and US$1.3715 and was near US$1.3690 in afternoon US trade. The Aussie dollar rose from lows near US89.85c to highs near US90.40c, and was near US90.30c in afternoon US trade. And the Japanese yen eased from its strongest levels near 101.57 yen per US dollar to JPY101.97 and was trading near JPY101.77 in afternoon US trade. This morning the Euro is near US$1.3695, Aussie at US90.45c and Japanese yen at JPY101.77.

World oil prices rose on Friday. There were supply disruptions in Libya and Angola while major winter snowstorms on the US east coast boosted heating oil demand. Brent crude rose by US56c to US$109.08 a barrel while US Nymex crude rose by US5c to US$100.30 a barrel. Over the week Brent fell by 0.4% while Nymex rose by 0.4%.

Base metal prices rose between 0.1-1.8% on the London Metal Exchange on Friday with aluminium up the least and tin doing best. Over the week copper fell 0.1% but other metals rose with tin up 3.7%. The gold price rose again on Friday with the Comex gold futures up by US$18.50 or 1.4% to US$1,318.60 per ounce. Over the week gold rose by US$55.70 or 4.4% - the biggest gain in six months. The iron ore price rose by US$1.20 on Friday to US$123.20 a tonne and rose by $2.30 over the week.

Ahead: In Australia car sales data is released. In the US, the Presidents Day holiday is observed.

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