Australian Stock Market Report – Morning 2/14/14

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By Craig James, CommSec Chief Economist | February 14, 2014 9:58 AM EST

US MORNING REPORT
(8am AEDT)

US retail sales fell by a surprising 0.4% in January after a 0.1% fall in December. Core sales (excluding automobiles, gasoline, building materials, and food services) fell 0.3%. US initial jobless claims rose by 8,000 to 339,000 last week. US business inventories rose by 0.5% in December after rising by 0.4% in November. Analysts believe that the current level of inventory is unsustainable and it is likely that businesses will ease production to work through current stocks over the March quarter. Business sales rose by 0.1% in December.


Eurozone retail sales lifted to a 28 month high in August, said Markit (Reuters)

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European shares fell on Thursday with concerns over the Italian political leadership dominating sentiment. After the market closed, a statement from the Italian premier´s office said Prime Minister Letta would tender his resignation on Friday to make way for a new government. Italy´s benchmark FTSE MIB index trimmed losses towards the close, ending down 0.2%. In earnings news, Swiss food group Nestle fell 1.5% after it downgrade growth targets due to weaker demand from emerging markets. Britain´s Rolls-Royce slumped 13.6% with profit growth halved for 2014. The FTSEurofirst 300 index fell by 0.1% with the UK FTSE down by 0.2% while the German Dax gained 0.6%. Mining shares were mixed in London trade with BHP Billiton shares up by 0.5% while Rio Tinto fell by 0.4%.

US sharemarkets rose on Thursday, as investors rugged of weak economic data, putting it down to harsh weather conditions. At the close of trade, the US Dow Jones was up by 64 points or 0.4%. The S&P 500 rose by 0.6% while the Nasdaq gained 39 points or 0.9%.

US treasury prices rose on Thursday (yields lower) as softer than expected US economic data gave traders reason to question further tapering. US 2 year yields lost 4pts to 0.31% while US 10 year yields lost by 4pts to 2.73%.

Major currencies rallied against the greenback on Thursday. The Euro rose from US$1.3605 to US$1.3690, and was near US$1.3675 in afternoon US trade. The Aussie dollar rose from lows near US89.35c to highs near US89.95c, and was near US89.85c in afternoon US trade. And the Japanese yen traded between 101.70 yen per US dollar and JPY102.35 and was trading near JPY102.20 in afternoon US trade.

World oil prices eased modestly on Thursday, following the weaker economic data. Brent crude fell by US8c to US$108.70 a barrel while US Nymex crude fell by US2c to US$100.35 a barrel.

Base metal prices were mixed on the London Metal Exchange on Thursday. Nickel lost 1.9% while aluminium gained 0.5%. The gold price rose for a seventh straight session on Thursday with the Comex gold futures up by US$5.10 or 0.4% to US$1,300.10 per ounce. The iron ore price rose by $1 to US$122.00 a tonne.

Ahead: In Australia, lending finance data is released. In the US, industrial production, and capacity utilisation are released. In China inflation data is released. RBA Assistant Governor Kent speaks in Sydney.

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Eurozone retail sales lifted to a 28 month high in August, said Markit (Reuters)
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