Australian Stock Market Report – Morning 3-7-13

US MORNING REPORT
(8am AEDT)

The US ADP reported another 198,000 private sector jobs were created in February, with January numbers revised up to 215,000. The underlying trend remains one of improvement in terms of job creation. US factory orders fell back by 2pct in January, largely due to a fall in demand for military hardware and commercial aircrafts.

Eurozone GDP was confirmed at a 0.6pct contraction in the December quarter, with annual growth at -0.9pct. Consumer spending fell by 0.4pct in the December quarter, gross fixed capital formation fell by 1.1pct, government spending dropped by 0.1pct, while exports and imports both fell by 0.9pct.

European shares fell on Wednesday as investors booked profits with markets at multi-year highs. Mining stocks were the biggest drag after a slide in metals prices weighed on equities. Shares in Rio Tinto fell by 2pct in London trade while shares in BHP Billiton fell by 1.4pct. The benchmark FTSEurofirst 300 index fell by 0.3pct and the UK FTSE index eased by 0.1pct while the German Dax gained 0.6pct.

The US Dow Jones share index hit fresh record highs on Wednesday following the strong US ADP employment report. The rally was largely broad-based although the energy sector was weaker following the fall in the oil price. At the close of trade, the Dow Jones was up by 42pts or 0.3pct. The S&P 500 index rose by 0.1pct and the Nasdaq was down 2pts or 0.1pct.

US long-term treasuries fell again on Wednesday (yields higher) as investors shunned safe-haven assets like government bonds in favour of equities. US 2yr yields were steady near 0.25pct while US 10yr yields rose by 4pts to 1.943pct.

The US dollar rallied against major currencies on Wednesday following the upbeat US ADP employment data. The Euro fell from highs near US$1.3070 to lows around US$1.2980 and was near US$1.2990 at the close of US trade. The Aussie dollar fell from highs near US102.90c to US102.30c and was around US102.45c in late US trade. And the Japanese yen eased from 93.15 yen per US dollar to JPY94.10, and was trading near JPY94.05 in late US trade.

World crude oil prices fell on Wednesday after US inventory data showed a larger than expected build. US crude oil inventories rose by 3.83 million barrels well ahead of forecasts for just 500,000 barrels. Brent crude fell by US62c to US$110.99 and the US Nymex crude price fell US39c to US$90.43 a barrel.

Base metal prices were weaker on the London Metals Exchange on Wednesday. The exception was tin which gained 0.1pct. The stronger US dollar and soft demand from China drove the weakness across the commodity complex. The gold price was unchanged with the Comex April gold futures price holding steady at US$1,574.90 per ounce. And the iron ore price rose by US60c to US$145.80 a tonne.

Ahead: In Australia, trade data and tourist arrivals are released. In the US, consumer credit and trade are released.

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