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Morning Market Report

A subdued day on markets all round, particularly in Australia.

The market is down 54 points.

The Dow Jones was up 49 at 16,322 — The market rallied early after data releases were seen in a positive light. The market fell in later trade before a late rally, with the market trading in a 170 point range.

Early data was seen positively, even though GDP was revised downwards to 2.4% from the preliminary 3.2% reading. Better than expected consumer sentiment and the Chicago PMI provided some hope that recent softness in economic data was weather-related.

Weakness later in the day came after news reports of rising tension in Ukraine, as Russian troops increased their presence in Crimea and were reported to have taken control of two airports and a television station.

The S&P rose five points to a second record closing high of 1859.

Oil fell 0.20% to US$102.20. 

Gold fell US$2.10 to US$1329.700 per ounce.

The US$ was weaker against most major currencies and the Australian dollar was weaker, currently trading at US89.08c.

VIX Index fell 0.28% to 14.00.

US treasury markets were mixed —  The yield on the 10 year bond was little changed at 2.649%.

European shares were mixed  — The UK FTSE rose 0.08% and the German DAX rose 0.44% but the French CAC fell 0.01%.

European bonds were weaker —  The yield on the Euro 10 year bond yield rose 7 basis points to 1.636% and the UK 10 year bond yield was 6 basis points lower at 2.738%. The Greek bond yield fell below 7.0%since 2006.

Base metal prices were mixed —  Nickel rose 1.92% and zinc rose 1.27% but aluminium fell 0.79% and copper was 0.08% lower.

Iron ore rose US$0.10 to US$118.10 a tonne.

STORIES

  • The AIG performance of manufacturing index came in at 48.6 in February up 1.9 points from the previous month. This is the fourth consecutive month of contraction, according to the survey.
  • Transpacific Industries Group (TPI) — Is selling its NZ waste-management business to China’s state-owned Beijing Capital Group for $US798 million. The sale is expected to be completed by the end of June. Proceeds are to be used to redeem its step-up preference securities and refinance its syndicated debt facility. Some funds may be used towards future investments or resuming dividend payouts to shareholders.
  • The Australian reports that the budget will include a $5 billion spend on infrastructureTransurban(TCL) and Leighton (LEI) expected to benefit.
  • Qantas Airways (QAN) — The AFR says Qantas is looking to launch legal action against its rival Virgin Australia (VAH). It claims the smaller airline’s foreign ownership levels have breached rules for Australian based international carriers. Back in 2012, Virgin split the ownership of its domestic and international business. This allowed the publicly listed company to be foreign owned. Which is now 77% foreign owned. Virgin’s international division remains majority Australian owned, complying with the Air Navigation Act. Qantas is unable to do the same thing as Virgin because of the constraints placed on it by the Qantas Sale Act. On Friday the Abbott Government refused to provide a debt guarantee for the airline. Instead the Government is looking to repeal the Qantas Sale Act which will allow foreign ownership and put Qantas on a level playing field with Virgin.
  • US Jobs number on Friday is crucial  — We have the US official jobs number on Friday preceded by the ADP . Whilst the jobs numbers are a pivotal part of the US Economic recovery story it is likely that if we get a third weak number on the trot it will again be dismissed as weather related.
  • The Chinese Manufacturing PMI number fell to an eight month low at the weekend of 50.2 in February down from 5.5 in January. The market had been expecting 50.1. The weaker number is being dismissed as covering the Lunar New Year in early February when a lot of businesses close for a week.

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