Australian Stock Market Report – Morning 3/4/2013

US MORNING REPORT
(6am AEDT)

The US ISM manufacturing index rose from 53.1 to a 20-month high of 54.2 in February, ahead of forecasts for a result near 52.5. US construction spending fell 2.1pct in January. Consumer sentiment rose from 76.3 to 77.6 in February. US vehicle sales rose from 15.23 million to 15.38m in February, above forecasts. US personal income slumped 3.6pct in January (forecast -2.2pct) but consumption rose 0.2pct.

European shares were mixed on Friday. A drop in the Chinese purchasing managers index weighed on mining stocks. And focus remained on the prospects for a stable government being formed in Italy. The benchmark FTSEurofirst 300 index fell by 0.2pct but while the UK FTSE index rose by 0.3pct, the German Dax lost 0.4pct. Mining stocks fell with shares in Rio Tinto down by 2.8pct in London trade while shares in BHP Billiton fell by 0.4pct.

US sharemarkets posted modest gains on Friday. US economic data was generally better than forecasts but investors had concerns about the impact on the economy of enforced spending cuts. At the close of trade the Dow Jones was higher by 35pts or 0.3pct with the S&P 500 index up by 0.2pct and the Nasdaq lifted 9.5pts or 0.3pct. Over the week the Dow Jones rose by 0.6pct with the S&P 500 up 0.2pct and the Nasdaq rose by 0.25pct.

US treasuries rose on Friday (yields lower) as the sequester or forced spending cuts came into operation. The sequester is expected to reduce economic growth by near 0.5 percentage points. US 2yr yields fell by 1pt to 0.24pct while US 10yr yields fell by 4pts to 1.84pct. Over the week US 2yr yields fell by 1pt and US 10yr yields fell by 12pts.

Major currencies eased against the US dollar in European and US trade on Friday. The Euro fell from highs near US$1.3100 to levels near US$1.2970 and was near US$1.3020 in late US trade. The Aussie dollar eased from highs near US102.40c to US101.80c and was around US102.00c at the US close. And the Japanese yen eased from 92.39 yen per US dollar to JPY93.68, and was trading near JPY93.56 at the end of the US session.

World crude oil prices fell again on Friday. US budget cuts, mixed global economic data and the unstable Italian political situation all weighed on sentiment. Brent crude fell by US98c to US$110.40 and the US Nymex crude price eased by US$1.37 to US$90.68 a barrel. Over the week Brent fell by US$3.70 or 3.2pct and Nymex lost $2.45 or 2.6pct.

Base metal prices fell up to 2.4pct on the London Metals Exchange on Friday, the exception being nickel, up less than 0.1pct. Over the week metals fell up to 3.6pct (aluminium) although tin rose 0.3pct. The gold price eased again on Friday with the Comex April gold futures price down by US$5.80 an ounce or 0.4pct to US$1,572.30 per ounce. Over the week gold fell by US$8.60 or 0.5pct. The iron ore price fell by US$1.10 to US$150.60 a tonne on Friday and fell US$3.00 over the week.

Ahead: In Australia, the ABS Business Indicators publication is released together with building approvals. In the US, the New York ISM index is released.
[Kick off your trading day with our newsletter]