Australian Stock Market Report – Morning 4/16/14

MORNING REPORT
(6am AEST)

In US economic data, the headline and core measures of consumer prices (the latter excludes food and energy) both rose 0.2% in March, above forecasts for a 0.1% gain. The New York Federal Reserve manufacturing index eased from +5.61 to +1.29 in April. And overall capital flows into the US lifted from US$83 billion in January to US$167.7 billion in February.

European shares eased on Tuesday. There were continued tensions in Ukraine with Russia claiming the country was on the brink of civil war. Investors were also cautious ahead of the release of Chinese economic growth data. The FTSEurofirst 300 index fell by 1.0% with the German Dax lower by 1.8% and the UK FTSE fell by 0.6%. Mining shares also fell in London trade with shares in BHP Billiton down by 2.0% while shares in Rio Tinto lost 3.1%.

US sharemarkets were volatile over the Tuesday session, rising at the open, retreating and then recovering. Shares in Coca Cola rose 3.7% and Johnson & Johnson rose by 2.1% after posting earnings results. The Dow Jones index traded over a near 210 point range before closing higher by 89 points or 0.4%. The S&P 500 was up by 0.7%, while the Nasdaq rose by 11.5 points or 0.3%. Shares in Intel rose 3% after the bell after its earnings beat forecasts.

US long-term treasury prices rose on Tuesday as investors embraced safe-haven bonds in response to rising tensions in Ukraine. US 2 year yields fell 1 point to 0.37% while US 10 year yields fell by 3 points to 2.623%.

Major currencies were mixed against the greenback in European and US trade on Tuesday. The Euro lifted from lows near US$1.3790 to around US$1.3830, before ending US trade around US$1.3810. The Aussie dollar fell from highs near US93.95c to around US93.35c before finishing US trade around US93.50c. And the Japanese yen strengthened from 101.95 yen per US dollar to JPY101.50 and was near JPY101.85 at the US close.

World oil prices eased on Tuesday as investors mulled geopolitical issues in Libya, Nigeria and Ukraine and US economic data. Brent crude fell by US33c or 0.3% to US$108.74 a barrel while US Nymex fell by US30c to US$103.75 a barrel.

Base metal prices fell up to 1.8% on the London Metal Exchange on Tuesday with copper and aluminium leading the way although other metals fell up to 0.7%. The Comex gold futures quote fell by US$27.20 an ounce or 2% to US$1,300.30 per ounce after the World Gold Council said Chinese demand would consolidate this year after record demand in 2014. Iron ore rose by US10c to US$117.10 a tonne on Tuesday.

Ahead: In Australia dwelling commencements data for the December quarter is released. BHP Billiton and Fortescue release quarterly production figures. In the US, the Beige Book, housing starts and industrial production figures are released. Federal Reserve chief Janet Yellen delivers a speech. In China, economic growth data is released together with retail sales, investment and production.

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