Australian Stock Market Report – Morning 2/19/14

US MORNING REPORT
(8am AEDT)

In US economic data, the Empire State manufacturing index eased from +12.51 to +4.48 in February. In December there were capital outflows from the US totalling US$119.6 billion, up from $16.6 billion in November. And the National Association of Home Builders index eased from +56 to +46 in February - the biggest one-month decline recorded.

European shares were again mixed on Tuesday. The FTSEurofirst 300 index fell by 0.1% with the UK FTSE up by 0.9% while the German Dax was flat - up just 3 points. The pivotal ZEW consumer sentiment report in Germany was mixed bur the headline rate fell from 55.7 to 51.7 in January. Mining shares were stronger in London trade with BHP Billiton shares up by 1.9% while Rio Tinto gained 0.3%.

US sharemarkets were mixed on Tuesday as investors dissected latest economic reports and corporate news. While economic data was soft, most analysts attributed the weakness to harsh winter weather, delaying activity. Shares in Coca Cola fell by 3.8%, dragging on the Dow Jones index, in response to weak sales figures. Shares in Tesla Motors rose 2.8% on speculation that Apple may be interested in buying the electric car maker. At the close of trade, the US Dow Jones was down by 24 points or 0.2% but the S&P 500 was up by 0.1% while the Nasdaq gained 28 points or 0.7%.

US long-term treasury prices rose on Tuesday (yields lower) in response to soft economic data. US 2 year yields fell by 2 points to 0.30% while US 10 year yields fell by 4 points to 2.71%.

Major currencies rose against the greenback over the European and US sessions. The Euro lifted from lows near US$1.3700 to US$1.3765 and was near US$1.3755 in afternoon US trade. The Aussie dollar fell from highs near US90.50c to lows near US90.00c, rebounded to US90.45c and settled around US90.30c in afternoon US trade. And the Japanese yen lifted from its weakest levels near 102,72 yen per US dollar to JPY102.24 and was trading near JPY102.35 in afternoon US trade.

US oil prices hit 4-month highs on Tuesday as harsh winter weather on the US east coast boosted heating oil demand. In addition Reuters reported that industry intelligence provider Genscape showed a drop of 1.4 million barrels at Cushing over the week. Brent crude rose by US$1.28 or 1.2% to US$110.46 a barrel while US Nymex crude rose by US$2.13 or 2.1% to US$102.43 a barrel.

Base metal prices rose between 0.1-1.9% on the London Metal Exchange on Tuesday with aluminium up the most and tin up the least. The gold price rose again on Tuesday with the Comex gold futures up by US$5.80 or 0.4% to US$1,324.40 per ounce. The iron ore price was unchanged at US$124.40 a tonne.

Ahead: In Australia the wage price index is released. In the US, minutes of the last Federal Reserve meeting are released with weekly readings on chain store sales and housing finance and monthly producer prices.

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