MORNING REPORT (6.05am AEST)
US San Francisco Federal Reserve President Williams and Dallas Fed President Fisher spoke at a monetary policy conference. Both speakers agreed that the super-easing monetary policy conditions could have adverse consequences in the long run - resulting in excessive asset price growth and encouraging investors to take on too much risk. However Williams doesn´t believe rates should rise till the second half of 2015.
European shares eased on Monday as pharmaceutical giant Pfizer´s failed bid for AstraZeneca weighed on markets. AstraZeneca fell 11%, and was the biggest drag on the FTSEurofirst 300. Banking stocks were also weaker after Deutsche Bank (down 1.7%) announced a €8 billion capital increase. The STOXX Europe 600 Bank Index fell by 0.8%. The FTSEurofirst 300 index fell by 0.2% while the German Dax rose by 0.3%, and the UK FTSE fell by 0.2%. Mining shares were lower with shares in BHP Billiton down by 0.6% while Rio Tinto fell by 1.9%.
US sharemarkets lifted on Monday with technology and small cap stocks leading the gains. High growth ´´momentum´´ stocks were amongst the best performers, TripAdvisor rose 5.2% and Netflix gained 4.1%. The small-cap Russel 2000 index lifted 0.8%. The Dow Jones index rose by almost 21 points or 0.1% with the S&P 500 up by 0.4% while the Nasdaq rose by 35 points or 0.9%.
US long-term treasury prices reversed course and fell on Monday (yields higher) in response to comments by various Fed speakers. US 2 year yields fell by 2 points to 0.35% while US 10 year yields were up by 2 points to 2.55%.
Major currencies were mixed against the US dollar on Monday over the European and US sessions. The Euro rose from lows near US$1.3705 to highs near US$1.3735, before ending US trade around US$1.3710. The Aussie dollar fell from highs near US93.65c to lows near US93.25c before finishing US trade around US93.30c. And the Japanese yen held between 101.60 yen per US dollar and JPY101.10, before ending US trade near JPY101.40.
World oil prices were mixed on Monday. A broadly weaker US dollar supported US crude prices while Brent price eased as the slide in European equities outweighed on-going supply disruptions in Libya. Brent crude fell by US38 or 0.3% to US$109.37 a barrel while US Nymex rose by US59 or 0.6% to US$102.61 a barrel.
Base metal prices were higher on the London Metal Exchange on Monday. Nickel was the best performer up 5.8%, while other metals rose between 0.2%-1.2%. The Comex gold futures quote rose by just US40c an ounce on Monday to US$1,293.80 per ounce. Iron ore fell by US$2.20 a tonne on Monday to US$98.50 a tonne.
Ahead: In Australia Reserve Bank Board minutes are released and Reserve Bank Assistant Governor Debelle delivers a speech in Adelaide. In the US, no major economic data is released.
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