Australian Stock Market Report – Morning 3/31/14

US MORNING REPORT
(5.15am AEDT)

In US economic data, personal income and spending both rose by 0.3% in February, in line with forecasts. And consumer sentiment rose from a preliminary reading of 79.9 to 80.0 in March, just short of forecasts tipping a result near 80.5.

European shares rose on Friday on speculation of fresh stimulation for Chinese and European economies. Low inflation results in Spain and Germany gave scope for the European Central Bank to ease policy this Thursday. The FTSEurofirst 300 index rose by 0.8% with the UK FTSE up 0.4%, while the German Dax gained 1.4%. Mining shares were firmer in London trade with shares in BHP Billiton up by 1.1% while Rio Tinto edged 0.1% higher.

US sharemarkets rose on Friday although finishing off the day´s highs, dragged down by profit-taking in biotechnology stocks. The Dow Jones index closed higher by almost 59 points or 0.4% with the S&P 500 up by 0.5% while the Nasdaq rose by 4.5 points or 0.1%. Over the week the Dow Jones rose by 0.1% but the S&P 500 lost 0.5% while the Nasdaq lost 2.8%.

US long-term treasury prices fell on Friday (yields higher) in response to firmer economic data with investors showing preference for equities over bonds. US 2 year yields were flat at 0.45% while US 10 year yields rose by 4 points to 2.72%. Over the week US 2 year yield rose just over 1 point and US 10 year yields fell by around 1 point.

Major currencies were mixed against the greenback over the European and US sessions on Friday. The Euro rose from lows near US$1.3705 to US$1.3770 and ended US trade around US$1.3750. The Aussie dollar fell from highs near US92.75c to lows near US92.35c and was around US92.45c at the US close. And the Japanese yen eased from near 102.06 yen per US dollar to JPY102.96 and was near JPY102.80 at the US close.

World oil prices rose on Friday. Investors were watchful on reports that Russian troops were massing on the Ukraine border. And US economic data was firmer, boosting hopes of stronger oil demand. Brent crude rose by US24c or 0.2% to US$108.07 a barrel while US Nymex crude rose by US39c or 0.4% to US$101.67 a barrel. Over the week Brent recorded the first weekly gain since February, lifting US$1.15 or 1.1%. Nymex rose US$2.21 or 2.2%.

Base metal prices generally rose up to 1.7% on the London Metal Exchange on Friday with copper leading the way. But lead and nickel both eased less than 0.1%. Over the week metals rose up to 3.0% (copper) but nickel lost 2.5% and lead lost 0.5%. The gold price fell slightly on Friday with the Comex futures quote down by US90c an ounce to US$1,293.80 per ounce. Over the week gold fell by US$42.20 an ounce or 3.2%. Iron ore was unchanged at US$112.30 a tonne on Friday and rose $1.60 over the week.

Ahead: In Australia the monthly inflation gauge is scheduled. In the US, the Chicago purchasing managers index and Dallas Federal Reserve business index are released.

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