Australian Stock Market Report – Morning 4/2/14

US MORNING REPORT
(7.00am AEDT)

n US economic data, the ISM manufacturing index rose from 53.2 to 53.7 in March. Construction spending rose by 0.1% in February. Chain store sales rose 2.3% in the latest week compared with a year ago, down from a 3.1% gain in the prior week. And the Dallas Federal Reserve services index rose from +9.8 points to +16.5 points in March.

European shares were firmer on Tuesday underpinned by solid French and US economic data and merger and acquisition news. There also was continued speculation that the European Central Bank will unveil fresh stimulus measures on Thursday. The FTSEurofirst 300 index rose for the sixth straight session, up by 0.6% with the UK FTSE up 0.8%, while the German Dax lifted 0.5%. Mining shares posted form gains in London trade with shares in BHP Billiton up by 2.1% while Rio Tinto rose by 1.1%.

US sharemarkets recorded broad-based gains on Tuesday in response to firmer economic data. Shares in auto makers rose in response to latest sales data with Ford up 4.6%. The Dow Jones index closed higher by 75 points or 0.5% with the S&P 500 up by 0.7% while the Nasdaq rose by 69 points or 1.6%.

US treasury prices were weaker on Tuesday (yields higher) in response to encouraging economic data in the US, France and China. US 2 year yields rose by 1 point to 0.434% while US 10 year yields were up 3 points to 2.757%.

Major currencies were mixed against the greenback over the European and US sessions on Tuesday. The Euro rose from lows near US$1.3770 to US$1.3815 but ended US trade around US$1.3795. The Aussie dollar eased from highs near US92.80c to lows near US92.30c and was around US92.45c at the US close. And the Japanese yen eased from near 103.19 yen per US dollar to JPY103.71 and was near JPY103.68 at the US close.

World oil prices fell on Tuesday on expectations that data will show another lift in US commercial crude stocks in the latest week. There were also reports that Libya may re-open three oil ports representing exports of 600,000 barrels per day export capacity. Brent crude fell by US$2.16 or 2.0% to US$105.62 a barrel while US Nymex crude fell by US$1.84 or 1.8% to US$99.74 a barrel.

Base metal prices were generally higher by up to 0.8% on the London Metal Exchange on Tuesday with nickel leading the gains. But lead fell 1.0% and zinc lost 0.4%. The gold price fell on Tuesday with the Comex futures quote down by US$3.80 an ounce to US$1,280.00 per ounce. Iron ore rose by US80c to US$117.60 a tonne on Tuesday.

Ahead: In Australia job vacancies, building approvals and engineering construction figures are released. In the US, the ADP employment series, weekly mortgage data and factory orders are released.

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