Australian Stock Market Report – Morning 3/21/14

US MORNING REPORT
(7am AEDT)

In US economic data, new claims for unemployment insurance rose by 5,000 to 320,000 in the latest week. Existing home sales fell by 0.4% to 4.60 million in February, as expected. The leading index rose by 0.5% in February, above forecasts for a 0.2% gain. And the Philadelphia Federal Reserve index rose from minus 6.3 points to +9.0 in March, above forecasts for a result near +3.8 points.

US President Barack Obama has unveiled more economic sanctions against Russia. Thomson Reuters reports there were ´´sanctions on 20 more prominent Russians, including allies of Russian President Vladimir Putin. Russia retaliated with its own sanctions against 9 U.S. officials and lawmakers.´´

European shares were mixed on Thursday as investors digested the US Federal Reserve decision and the latest encouraging US economic data. The FTSEurofirst 300 index rose by 0.1% with the UK FTSE down by 0.5% while the German Dax was higher by 0.2%. Mining shares were higher in London trade with BHP Billiton up by 0.8% and Rio Tinto rose by 0.4%.

US sharemarkets rebounded on Thursday after investors had a fresh look at the statement by the US Federal Reserve chair and also assessed a batch of positive economic data readings. Banks lead the gains. At the close of trade the Dow Jones index was up by 109 points or 0.7%, recouping almost all the previous day´s losses. The S&P 500 was up by 0.6% while the Nasdaq lifted by 11.7 points or 0.3%.

US treasury prices steadied on Thursday after the sharp rise in yields the previous day. Economic data appear to have a limited impact on bond pricing. US 2 year yields were steady at 0.428% while US 10 year yields were steady near 2.775%.

Major currencies were mixed against the greenback on Thursday in European and US trade compared with the close of Australasian trade. The Euro fell from near US$1.3845 to US$1.3750 and ended US trade around US$1.3775. The Aussie dollar rose from lows near US89.85c to highs near US90.50c and was around US90.35c at the US close. And the Japanese yen weakened from 102.19 yen per US dollar to JPY102.53 and was near JPY102.44 at the US close.

World oil prices were mixed again on Thursday. Brent crude rose by US60c or 0.6% to US$106.45 a barrel while US Nymex crude lost US94c or 0.9% to US$99.43 a barrel. US oil prices were pressured by contract expiry, a firmer dollar against the Euro and Japanese yen as well as data showing ample supplies of crude oil. Brent oil rose in response to the exchange of sanctions between the US and Russia.

Base metal prices fell up to 3% on the London Metal Exchange on Thursday with nickel leading the declines while lead only lost 0.4%. The Comex gold futures price eased by US$10.80 an ounce or 0.8% to a monthly low of US$1,330.50 per ounce. Iron ore rose by 20c to US$110.70 a tonne.

Ahead: In Australia no major economic data is released. In the US, the weekly Economic Cycle Research Institute index is released.

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