Australian Stock Market Report – Morning 3/12/14

US MORNING REPORT
(7am AEDT)

In US economic data, chain store sales rose by 2.5% in the latest week compared with a year earlier, down from 2.7% in the previous week. Wholesale sales fell by 1.9% in January, the biggest fall in almost five years and well below forecasts centred on a gain of 0.2%. Inventories rose by 0.6%.

European shares were mixed on Tuesday as investors monitored the situation in Ukraine. The FTSEurofirst 300 index rose by 0.03% and while the UK FTSE eased 0.1%, the German Dax rose by 0.5% in response to encouraging trade data. Shares in Italy rose 0.4% with Spain down by 0.3%. Shares in UniCredit rose 6.2% after ruling out a capital increase. Mining shares were also mixed in London trade with shares in BHP Billiton down by 0.5% while Rio Tinto rose by 0.5%.

US sharemarkets rose at the start of trade on Tuesday before reversing course and ending lower on the day. Shares in Urban Outfitters fell 4.3% with American Eagle down 7.8%, weighing on the broader retail index. But shares in J.C. Penney lifted 3% after Citigroup raised the stock to a ´´buy´´ and boosted its price target. After being up 42 points, the Dow Jones index closed lower by 67 points or 0.4%. The S&P 500 lost 0.5% and the Nasdaq lost 27 points or 0.6%.

US longer-term treasury prices rose on Tuesday (yields lower) as investors continued to drift towards safe-haven assets like gold and government bonds in response to the tensions in Ukraine. Treasury sold $30 billion in three-year notes on Tuesday and will sell $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday. US 2 year yields were steady at 0.37% while US 10 year yields fell 1 point to 2.77%.

Major currencies were mixed against the greenback on Tuesday with the Japanese yen lifting and Aussie dollar falling in US trade. The Euro rose from lows from near US$1.3835 to US$1.3875 and ended US trade around US$1.3870. The Aussie dollar eased from near US90.50c to lows near US89.60c and was around the lows at the US close. And the Japanese yen lifted from near 103.34 yen per US dollar to JPY102.85 and was near these levels at the US close.

World oil prices were mixed on Tuesday as weighed up economic news, views on the situation in Ukraine, worries about the potential for more bond defaults in China and the political situation in Libya. Brent crude rose by US47c or 0.4% to US$108.52 a barrel while US Nymex crude fell by US$1.09 or 1.1% to US$100.03 a barrel.

Base metal prices fell up to 2.5% on the London Metal Exchange on Tuesday with copper leading the declines. But nickel bucked the trend, up 0.6%. The Comex gold futures price rose by US$5.20 an ounce or 0.4% to US$1,346.70 per ounce. Iron ore rose by US20c or 0.2% to US$104.90 a tonne.

Ahead: In Australia housing finance data is issued together with consumer sentiment. Reserve Bank Deputy Governor Philip Lowe delivers a speech. In the US no major economic data is expected.

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