Australian Stock Market Report – Morning 3/19/14

US MORNING REPORT
(7am AEDT)

In US economic data, the consumer price index rose by 0.1% in February to stand 1.1% higher than a year ago. The core rate (excludes food and energy) also rose 0.1% to be up 1.6% on a year ago. Housing starts eased by 0.2% to a 907,000 annual rate in February but permits rose by 7.7%. And net capital inflows to the US totalled $83 billion in January following outflows of US$126.7 billion in December.

European shares rose on Tuesday as investors focussed on comments by Russian President Vladimir Putin that he did not plan to seize any other regions of Ukraine. The FTSEurofirst 300 index rose by 0.7% on Tuesday with the UK FTSE up by 0.6% and the German Dax was higher by 0.7%. Mining shares were slightly higher in London trade with shares in BHP Billiton up by 0.4% and Rio Tinto rose by 0.3%.

US sharemarkets rose on Tuesday. Economic data was benign but investors were watching the situation in Ukraine. Shares in Microsoft rose by around 4% on reports that it may release an iPad version of its Office software suite on March 27. After being up 122 points, the Dow Jones index closed higher by 89 points or 0.6% with the S&P 500 up by 0.7% while the Nasdaq gained 53 points or 1.2%.

US longer-term treasury prices were firmer (yields lower) as investors adjusted positions ahead of the Federal Reserve decision. Economic data was largely benign with inflation confirmed at low levels. US 2 year yields fell by 2 points to 0.35% while US 10 year yields fell by 2 points to 2.676%.

Commodity currencies and the Japanese yen were firmer against the greenback on Tuesday while the Euro was flat. The Euro held between near US$1.3880 and US$1.3935 and ended US trade around US$1.3930. The Aussie dollar rose from lows near US90.65c to highs near US91.35c and was around US91.25c at the US close. And the Japanese yen strengthened from 101.85 yen per US dollar to JPY101.28 and was near JPY101.42 at the US close.

World oil prices rose on Tuesday with investors comforted by reports that Russia wasn´t planning to seize other areas of Ukraine. Also traders focused on continued weak oil supply from Libya. Libyan oil exports have held been between 100,000 and 120,000 barrels per day in the last two weeks, below its capacity of 1.25 million bpd. Brent crude rose by US55c or 0.5% to US$106.79 a barrel while US Nymex crude rose by US$1.62 or 1.7% to US$99.70 a barrel.

Base metal prices rose up to 2.0% on the London Metal Exchange on Tuesday with nickel leading the way although copper was largely flat. The Comex gold futures price eased by US$13.90 an ounce or 1.0% to US$1,359 per ounce. Iron ore rose by US90c or 0.8% on Tuesday to US$110.50 a tonne.

Ahead: In Australia no major economic data is released. David Jones will release earnings results. In the US, the Federal Reserve will hand down its monetary policy decision. Current account data is released.

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