Australian Stock Market Report – Morning 3/5/14

US MORNING REPORT
(8am AEDT)

In US economic data, the ISM New York index rose from 622.6 to 626.1 in February. The IBD economic optimism index rose from 44.9 to 45.1 in March. And chain store sales fell 1.3% in the latest week to stand 2.7% higher than a year ago.

European shares rebounded on Tuesday as worries about the situation in the Ukraine eased. Russian President Vladimir Putin ordered troops engaged in military exercises near the Ukraine border back to their bases. Shares in stocks most exposed to Russia rebounded most after heavy losses on Monday. The FTSEurofirst 300 index rose by 2.0%, largely recouping the previous day´s losses. The UK FTSE was up by 1.7% while the German Dax lifted by 2.5%. Mining shares were also stronger in London trade with shares in BHP Billiton up by 1.2% while Rio Tinto rose by 0.9%.

US sharemarkets rebounded on Tuesday on a lessening of tensions between the Ukraine and Russia. The CBOE volatility index (VIX) fell by 12.3% after lifting by 17.3% on Monday. But shares of RadioShack fell by 16.5% after it said it would close up to 1,100 stores in the US. At the close of trade, the US Dow Jones was up by 227 points or 1.4% with the S&P 500 up by 1.5% while the Nasdaq lifted by almost 75 points or 1.8%.

US treasury prices fell on Tuesday (yields higher) after an easing of tensions in the Ukraine prompted investors to unwind safe-haven trades. Russian President Vladimir Putin said his country would use military force in the Ukraine only as a last resort. US 2 year yields rose by 1 point to 0.333% while US 10 year yields lifted by 9 points to 2.696%.

Major currencies were again mixed against the greenback over the European and US sessions. The Euro rose from near US$1.3730 to US$1.3780 but then fell to lows near US$1.3725 and was around US$1.3735 in afternoon US trade. The Aussie dollar rose from near US89.25c to highs near US89.65c before easing again to around US89.50c in afternoon US trade. And the Japanese yen weakened from near 101.62 yen per US dollar to JPY102.20 and was trading near JPY102.24 in afternoon US trade.

World oil prices reversed most of the previous session´s gains on Tuesday as tensions eased in the Ukraine. Brent crude fell by US$1.90 or 1.7% to US$109.30 a barrel while US Nymex crude fell by US$1.59 or 1.5% to US$103.33 a barrel.

Base metal prices rose between 1.1-2.9% on the London Metal Exchange on Tuesday with nickel up the most and copper and lead up the least. The gold price fell as tensions eased in the Ukraine. The Comex gold futures price fell by US$12.70 an ounce or 0.9% to US$1,337.60 per ounce. Iron ore fell by US90c on Tuesday to US$116.80 a tonne.

Ahead: In Australia, the national accounts publication (includes economic growth figures) is released together with the Performance of Services index and new car sales. In the US, the ADP employment report and ISM services index is released.

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