MORNING REPORT (6.05am AEST)
In US economic data, the monthly Federal Budget posted a surplus of US$106.9 billion in April, just short of forecasts centred on US$114 billion.
European shares rose on Monday with solid profit results from Italian companies boosting sentiment. The FTSEurofirst 300 index rose by 0.7% to 6-year highs with the German Dax up by 1.3% and the UK FTSE rose by 0.6%. And mining shares also rose in London trade after JP Morgan lifted its rating on the mining sector to ´´overweight´´. Shares in BHP Billiton were up by 2.7% while Rio Tinto rose by 4.8%.
US sharemarkets rose to record levels on Monday. Broker upgrades in the mining and banking sectors served to drive prices higher while momentum stocks (technology, telecom & pharmaceuticals) were also in favour. The Dow Jones index rose by 112 points or 0.7% to record highs. The S&P 500 was up by 1.0% and is also at record levels. The Nasdaq lifted by 72 points or 1.8%.
US long-term treasury prices fell on Monday (yields higher) as investors drifted to equities rather than safe-haven government bonds. Investors also squared positions ahead of a big week of economic data releases. US 2 year yields were steady near 0.40% while US 10 year yields were up 2 points to 2.65%.
Major currencies were modestly weaker against the US dollar on Monday in the US session from Asian and European sessions. The Euro fell from highs near US$1.3775 to lows near US$1.3750, before ending US trade around US$1.3755. The Aussie dollar fell from highs near US93.85c to US93.50c before finishing US trade around US93.60c. And the Japanese yen eased from 101.84 yen per US dollar to JPY102.18, ending US trade near the weakest levels of the session.
World oil prices rose on Monday on concerns that the civil conflict in Ukraine could lead to supply disruptions across Europe. However Saudi Arabia said it would cover any potential supply disruption that emerged. Brent crude rose by US52c or 0.5% to US$108.41 a barrel while US Nymex rose by US60c or 0.6% to US$100.50 a barrel.
Base metal prices rose between 1.4-5.1% on the London Metal Exchange on Monday with nickel leading the way on on-going supply concerns. Nickel has lifted 50% this year with Reuters noting ´´the threat of tougher Western sanctions on the world´s biggest producer Russia compounded concerns about Indonesia´s ban on unprocessed ore exports.´´ The exception to base metal gains on Monday was tin, down 0.7%. The Comex gold futures quote rose for the first time in five days, up US$8.20 an ounce or 0.6% to US$1,295.80 per ounce. Iron ore rose by US30c a tonne or 0.3% to US$103.00 a tonne
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