Australian Stock Market Report – Morning 2/25/14

US MORNING REPORT
(8am AEDT)

In US economic data, the Markit ´´flash´´ services index fell from 56.7 to 52.7 in February. The Dallas Federal Reserve manufacturing business index eased from +3.8 to +0.3 in February. And the national activity index eased from minus 0.03 to minus 0.39 in January.

European shares rose to a 6-year high on Monday. Rating agency, Moody´s, raised Spain´s sovereign debt rating one notch to Baa2 with a ´´positive´´ outlook. A German business sentiment index rose in February to its highest level since July 2011. But shares in HSBC lost 2.8% after earnings fell short of forecasts. The FTSEurofirst 300 index rose by 0.6% with the UK FTSE up 0.4% and the German Dax rose by 0.5%. But mining shares eased in London trade with BHP Billiton down 0.5% while Rio Tinto lost 1.8%.

US sharemarkets rose on Monday with the S&P 500 hitting record highs during the session on merger activity with the Nasdaq at 14-year highs. RF Micro Devices agreed to buy TriQuint Semiconductor for about $1.6 billion. And Men´s Wearhouse raised its cash offer for rival Jos. A. Bank Clothiers. At the close of trade to go, the US Dow Jones was up by almost 104 points or 0.6%, losing 78 points in the last two hours of trade. The S&P 500 was up by 0.6% and the Nasdaq lifted 29 points or 0.7%.

US long-term treasury prices fell on Monday (yields higher) as investors embraced equities in preference to bonds. But soft economic data trimmed losses. US 2 year yields fell 1 point to 0.322% while US 10 year yields rose by 1 point to 2.746%.

Major currencies were again mixed against the greenback over the European and US sessions. The Euro eased from highs near US$1.3765 to US$1.3705 but lifted to near US$1.3735 in afternoon US trade. The Aussie dollar rose from lows near US89.60c to highs near US90.50c, and was around US90.30c in afternoon US trade. And the Japanese yen eased from its strongest levels near 102.21 yen per US dollar to JPY102.59 and was trading near JPY102.42 in afternoon US trade.

US oil prices rose on Monday. There was good economic news in Europe, the G20 nations committed to stronger growth, there were production outages in Libya and South Sudan, and there were expectations that weekly data would show a fall in US oil inventories. Brent crude rose by US79c or 0.7% to US$110.64 a barrel while US Nymex crude rose by US62c or 0.6% to US$102.82 a barrel.

Base metal prices generally eased on Monday up to 1.1%. Copper and lead fell most but zinc rose 0.3%. The gold price rose again on Monday in response to stronger physical demand in Asia. The Comex gold futures price rose by US$14.40 or 1.1% to US$1,338.00 per ounce. The iron ore price fell by US$2.50 on Monday to US$119.90 a tonne.

Ahead: In Australia no major economic data is scheduled. In the US, data on home prices and consumer confidence are released including weekly retail chain store sales data and the Richmond Federal Reserve index.

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