Australian Stock Market Report – Morning 3/25/14

US MORNING REPORT
(7am AEDT)

In US economic data, the ´´flash´´ purchasing managers index fell from a 4-year high of 57.1 to 55.5 in March, below forecasts for a result near 56.5. The national activity index rose from -0.39 to +0.14 in February. The composite Euro zone purchasing managers index eased from 53.3 to 53.2 in March, but the French index rose from 47.9 to 51.6. The Chinese manufacturing gauge fell from 48.5 to 48.1 in March.

European shares eased on Monday with investors focussing on the fall in the Chinese manufacturing gauge and watching developments in Ukraine. The FTSEurofirst 300 index fell by 1.0% with the UK FTSE down by 0.6%, while the German Dax lost 1.7%. Mining shares eased in London trade with shares in BHP Billiton down by 0.6% while Rio Tinto lost 0.4%.

US sharemarkets were weaker on Monday with biotechs leading the declines. The Nasdaq biotech index lost 3.0%. The index rose 66% last year. Shares in Netflix also fell by 6.7%. The Dow Jones index closed lower by 26 points or 0.2% with the S&P 500 down 0.5% and the Nasdaq lost 50 points or 1.2%.

US longer-term treasury prices rose modestly on Monday (yields lower) as traders further re-assessed pricing after the big moves after the Federal Reserve decision last week. US Treasury is due to sell $32 billion in two-year notes on Tuesday, and will sell $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday. US 2 year yields were flat at 0.437% while US 10 year yields fell by 2 points to 2.732%.

Major currencies were firmer against the greenback over the European and US sessions on Monday. The Euro rose from lows near US$1.3760 to US$1.3870 and ended US trade around US$1.3840. The Aussie dollar rose from lows near US90.75c to highs near US91.50c and was around US91.30c at the US close. And the Japanese yen lifted from 102.64 yen per US dollar to JPY102.14 and was near JPY102.18 at the US close.

World oil prices were little-changed after investors weighed up mixed economic data across the US, Europe and China. Traders were also watching the situation in Libya. Reuters reports that ´´rebels have occupied ports and oilfields, depressing the country´s oil production to below 250,000 barrels per day.´´ The El Feel oilfield was shut on Monday. Brent crude fell by US11c or 0.1% to US$106.81 a barrel while US Nymex crude rose by US14c or 0.1% to US$99.60 a barrel.

Base metal prices were mixed on the London Metal Exchange on Monday but increases or declines didn´t exceed 0.5%. The gold futures price fell to the lowest levels in more than five weeks on Monday. The Comex futures price fell by US$24.80 an ounce or 1.9% to US$1,311.20 per ounce. Iron ore fell by 20c to US$110.50 a tonne on Monday.

Ahead: In Australia the Reserve Bank Deputy Governor Philip Lowe delivers a speech. In the US, consumer confidence and home price data is released.

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