MORNING REPORT (6am AEST)
In US economic data, retail sales rose by 1.1% in March, ahead of forecasts for an increase in sales of 0.7%. It was the biggest gain in sales since September 2012. Excluding autos, sales rose by 0.7%, ahead of forecasts for a gain of 0.5%. Business inventories rose by 0.4% in February, largely in line with forecasts.
European shares posted modest gains on Monday in response to solid retail sales data in the US. But investors remained generally cautious on the fear of violence between the Ukraine and pro-Russian separatists. The FTSEurofirst 300 index rose for the first time in four days, up 0.5%. The German Dax and UK FTSE both rose by 0.3%. Mining shares also rose in London trade with shares in BHP Billiton up by 1.5% while shares in Rio Tinto rose by 2.3%.
US sharemarkets lifted on Monday, bouncing higher at the end of trade after a sell-off in late afternoon trade. Economic data was above expectations but investors awaited key earnings news over the week and watched developments in Ukraine. The Dow Jones index rose by 146 points or 0.9% after being higher by 158 points. The S&P 500 was up by 0.8%, while the Nasdaq rose by 23 points or 0.6%.
US long-term treasury prices fell slightly on Monday (yields higher). Economic data was stronger than forecast prompting investors to drift back to equities and away from bonds. However there was caution ahead of speeches by Federal Reserve chair Janet Yellen. US 2 year yields were steady near 0.37% while US 10 year yields rose by 2 points to 2.64%.
Major currencies were mixed against the greenback in European and US trade on Monday. The Euro fell from highs near US$1.3860 to around US$1.3810, before ending US trade around US$1.3820. The Aussie dollar rose from lows near US93.85c to around US94.20c before finishing US trade around US94.15c. And the Japanese yen held between 101.51 yen per US dollar and JPY101.98 and was near JPY101.78 at the US close.
World oil prices rose in Monday in response to simmering tensions in Ukraine and better-than-expected US retail sales data. Western nations are mulling tougher sanctions against Russia. Investors also watched geopolitical developments in Libya and Nigeria. Brent crude rose by US$1.74 or 1.6% to US$109.07 a barrel while US Nymex rose by US31c to US$104.05 a barrel.
Base metal prices rose up to 2.2% on the London Metal Exchange on Monday with nickel leading the way. Other base metals rose up to 1.3% although aluminium lost 0.2%. The Comex gold futures quote rose by US$8.50 an ounce to US$1,327.50 per ounce. Iron ore rose by US10c to US$117.00 a tonne on Monday.
Ahead: In Australia minutes of the last Reserve Bank Board meeting are released. Rio Tinto releases quarterly production figures. In the US, consumer prices, capital flows data and the NAHB Housing Market index are released. Federal Reserve chief Janet Yellen speaks at a markets conference.
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