Australian Stock Market Report – Morning 4-10-13

US MARKET CLOSE MORNING REPORT
(6.00am AEST)

In US economic news, US wholesale inventories fell by 0.3pct in February - the biggest decline in nearly 1½-years. Economists had expected wholesale inventories to rise 0.5pct. The weaker build in inventories may result in lower estimates for March quarter growth.

European shares were mostly steady on Tuesday. Concerns about a weak first-quarter earnings season were offset by a rally in mining stocks, on prospects for continued strong metals demand from China. Industrial production jumped by 1.0pct in February following a 1.3pct drop in January. The rebound mirrors that seen in parts of Europe and suggests that the sharp contraction in output in the December quarter is being followed by a broad stabilisation in the March quarter. The FTSEurofirst 300 index was mostly flat. The UK FTSE index was higher by 0.6pct while the German Dax fell 0.3pct. Mining shares were higher with BHP Billiton up by 3.5pct in London trade while Rio Tinto rose by 4.8pct.

US sharemarket indices advanced on Tuesday with the Dow Jones closing at a record high on a rally in cyclical shares. Microsoft was the top gainer on the Dow up 3.9pct. Department store retailer JC Penny fell 12pct to 12-year lows after the board ousted Chief Executive Ron Johnson and replaced him with his predecessor. The Dow Jones index rose by 60pts or 0.4pct. The S&P 500 rose 0.4pct and the Nasdaq gained 16pts or 0.5pct.

US long-term treasuries fell on Tuesday (yields higher) as investors extended a selloff after last week's rally. An auction of $32 billion in 3yr debt proved soft with a weak bid-to-cover ratio. US 2yr yields were flat at 0.23pct while US 10yr yields rose by 3pts to 1.75pct.

The Euro and commodity currencies rose against the US dollar on Tuesday. The Euro rose from lows near US$1.3005 to US$1.3100 before settling near US$1.3085 at the close of US trade. The Aussie dollar rose from lows near US104.15c to highs near US105.05c and closed the US session near US104.85c. And the Japanese yen traded between 98.60 yen per US dollar to JPY99.30, and ended US trade at JPY99.05.

World crude oil prices rose on Tuesday, boosted by a weak US dollar and subdued Chinese inflation figures. Brent rose by US$1.57 or 1.5pct to US$106.23 and the US Nymex crude price rose by US84c or 0.9pct to US$94.20 a barrel.

Base metal prices were higher on the London Metals Exchange on Tuesday. Copper surged by 2.4pct to its highest level in two weeks after subdued Chinese inflation data suggested China would sustain accommodative monetary policy. Workers at Chilean state miner Codelco began a 24-hour stoppage early Tuesday which also supported prices. And the gold price rose, with the most active Comex June futures price up by US$14.20 an ounce or 0.9pct to US$1,586.70 per ounce. The iron ore price rose by US$1.50 or 1.1pct to US$139.10 a tonne.

Ahead: In Australia, the consumer confidence figures are released. In the US, FOMC minutes are released.

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