Australian Stock Market Report – Morning 4/17/14

MORNING REPORT
(6.15am AEST)

In US economic data, housing starts rose by 2.8% to an annual rate of 946,000 in March, below expectations for a result near 973,000. Industrial production rose by 0.7% in March, above expectations for a gain of 0.5%.

US Federal Reserve chief Janet Yellen has reiterated in a speech that interest rates would stay low for a considerable time after the Federal Reserve ends its bond buying program ends.

According to the latest Federal Reserve Beige Book economic growth expanded at a modest or moderate pace in eight of 12 regions in late March and early April.

European shares rose on Wednesday in response to encouraging Chinese economic data. The FTSEurofirst 300 index rose by 1.2%, reversing previous day losses, with the German Dax higher by 1.6% while the UK FTSE rose by 0.7%. Mining shares also higher in London trade with shares in BHP Billiton up by 0.6% while shares in Rio Tinto rose by 0.1%.

US sharemarkets rose on Wednesday as investors were comforted by comments from the Federal Reserve chief and US and Chinese economic data. The Dow Jones index rose by 162 points or 1.0% to the day´s high. The S&P 500 was up by 1.1%, while the Nasdaq rose by 52 points or 1.3%.

US long-term treasury prices were little-changed on Wednesday. US economic data was mixed, Chinese economic data was favourable and Janet Yellen reassured about Federal Reserve policy, prompting investors to embrace equities. US 2 year yields were steady near 0.371% while US 10 year yields were steady at 2.633%.

Major currencies were again mixed against the greenback in European and US trade on Wednesday. The Euro eased from highs near US$1.3850 to around US$1.3805, before ending US trade around US$1.3815. The Aussie dollar rose from lows near US93.40c to around US93.85c before finishing US trade around US93.70c. And the Japanese yen held between 102.15 yen per US dollar and JPY102,34 and was near JPY102.23 at the US close.

World oil prices rose on Wednesday. Investors dissected the latest Chinese economic data and watched the geopolitical situation in Ukraine. Brent crude was supported by worries that exports would resume quickly in Libya. Brent crude rose by US86c or 0.8% to US$109.60 a barrel while US Nymex rose by US1c to US$103.76 a barrel.

Base metal prices rose up to 1.8% on the London Metal Exchange on Wednesday with lead and aluminium leading the way although tin rose by just 0.3%. The Comex gold futures quote rose by US$3.20 an ounce or 0.2% to US$1,303.50 per ounce. Iron ore fell by US90c to US$116.20 a tonne on Wednesday.

Ahead: In Australia the CBA Business Sales Index is issued together with new car sales, imports and the NAB March quarter business survey. In the US, the Philadelphia Federal Reserve survey is released together with weekly claims for unemployment insurance. In China, data on foreign direct investment is released.

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