US MORNING REPORT (8am AEDT)
In US economic news the flash Markit Services PMI rose from 55.7 to 56.6 in January. New home sales fell 7.0% to a 414,000 annual rate in December, short of forecasts for a result near 457,000. And the Dallas Federal Reserve index rose from 3.1 to 3.8 in January.
European shares fell again on Monday, hitting the lowest levels in a month. Energy and telcos led the decline. The FTSEurofirst 300 index fell by 0.8% with the UK FTSE down by 1.7% and the German Dax lost 0.5%. German shares outperformed after the Bundesbank said that economic growth would accelerate in the current quarter. Mining shares were only modestly weaker in London trade with BHP Billiton shares down by 0.6% while Rio Tinto lost 0.1%.
US sharemarkets rebounded from lows on Monday but ended in the red as bargain hunters moved in following last week´s sharp losses. But the technology sector remained weak while mixed economic data restrained buying. Shares in Caterpillar rose 5.9% in response to its latest earnings result. After being down 96 points, the Dow Jones closed lower by 41 points or 0.3%. The S&P 500 fell by 0.5% and the Nasdaq was lower by 44.5pts or 1.1%.
US long-term treasury prices fell on Monday (yields higher), as investors booked profits ahead of the Federal Reserve meeting. US 2 year yields were steady near 0.35% while US 10 year yields rose by 4 points to 2.76%. Last week, US 10 year yields fell by 15 points.
Major currencies were mixed against major currencies on Monday as traders started to square positions ahead of the Federal Reserve meeting. The Euro eased from highs near US$1.3715 to lows around US$1.3655 and was trading near US$1.3670 in afternoon US trade. The Aussie dollar rose from lows near US87.05c in Asian trade to highs near US87.55c, and was near US87.40c in afternoon US trade. And the Japanese yen traded between 102.18 yen per US dollar and JPY102.93 and was trading near 102.58 in afternoon US trade.
World oil prices fell again on Monday as investors trim ´´riskier´´ assets like commodities in favour of defensive assets like gold and bonds. Concerns about economic growth in emerging nations also weighed on expectations for global oil demand. Brent crude fell by US$1.19 or 1.1% to US$106.69 a barrel while US Nymex crude fell by US92c or 1.0% to US$95.72 a barrel.
Base metal prices fell up to 2.4% on the London Metal Exchange on Monday with nickel leading the declines. Other metals fell between 0.2-1.0%. However the gold price fell only modestly on Monday after solid gains last week. Comex gold futures fell by US90c or 0.1% to US$1,263.40 per ounce. In after hours trade, spot gold fell to US$1,255 an ounce. The iron ore price was unchanged on Monday at US$124.30 a tonne.
Ahead: In Australia the NAB business survey is expected. In the US, durable goods orders, consumer confidence, home prices and the Richmond Fed survey are expected. Apple releases its result after the bell on Monday. The Federal Reserve begins a two-day meeting.
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