Australian Stock Market Report – Morning September 3, 2014

Car manufacturing — A worker assembles a car at a Nissan's manufacturing plant in Rosslyn, outside Pretoria, September 11, 2009. Reuters/Siphiwe Sibeko

* In US economic data, the ISM manufacturing index rose from 57.1 to a 3½ year high of 59.0 in August, well above forecasts of 56.8. And construction spending rose by 1.8% in July, above forecasts for a 1.0% gain and to a 5½ year high.

* European shares were mixed on Tuesday. Strong US economic data boosted the US dollar and put downward pressure on energy and gold prices. But traders continued to watch developments in Ukraine and awaited the European Central Bank meeting on Thursday. The FTSEurofirst 300 index fell by 0.1% with the German Dax up 0.3% while the UK FTSE rose by 0.1%. Australia's major miners were also higher in London trade with shares in BHP Billiton up by 0.8% while Rio Tinto rose by 0.2%.

* US sharemarkets were mixed on Monday. Stronger economic data led to fears of higher interest rates. And energy stocks fell in response to a lower oil price, although transports rose. And shares in Home Depot fell by 2% on reports that hackers may have stolen credit-card data. The Dow Jones index fell by almost 31 points or 0.2%. The broader S&P 500 index fell by 0.1% while the Nasdaq actually rose by 18 points or 0.4%.

* US treasury prices were weaker (yields higher) in response to stronger US economic data. US 2 year yields rose by 4 points to 0.528% while US 10 year yields were up by 8 points to 2.42%.

* Major currencies fell against the US dollar over the European and US sessions on Tuesday in response to solid US economic data. The US dollar index hit a 13-month high. The Euro fell from highs near US$1.3135 to around US$1.3110, before ending US trade near US$1.3130. The Aussie dollar eased from highs near US93.05c to lows near US92.65c before ending the US session close to US92.80c. And the Japanese yen eased from 104.77 yen per US dollar to JPY105.19, ending US trade near JPY105.10.

* World oil prices fell sharply on Tuesday in response to a stronger US dollar. A stronger greenback reduces the purchasing power of commodity buyers in Europe and Asia. Brent crude fell by US$2.45 or 2.4% to US$100.34 a barrel with the US Nymex price down by US$3.08 a barrel to US$92.88 a barrel.

* Base metal prices were mixed on Tuesday. Nickel lost 1.0% and tin lost 0.6% while other metals rose up to 0.7%, led by zinc. Gold prices fell on Tuesday in line with oil in response to a stronger US dollar. The Comex gold futures quote was down by US$22.40 or 1.7% to US$1,265.00 per ounce. Iron ore fell by US40c or 0.5% on Tuesday to US$86.70 a tonne.

Ahead: In Australia, economic growth (GDP) figures are released with new car sales and the Performance of Services gauge. In China the Purchasing Managers index for the services sector is released. In the US, car sales, factory orders, the weekly mortgage market index and weekly chain store sales figures are released.

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