Positive signs in stock markets after Facebook purchase

Share Markets:

US share markets were higher overnight, reflecting improved sentiment. 

Better-than-expected US PMI data and a US$19 billion purchase by Facebook Inc. inspired a lift in sentiment. 

The Dow Jones rose by 0.6% and the S&P 500 was up by 0.7% at the close.


US 10-year Treasury bond (futures implied) yields rose from 2.70% to 2.76%, appearing to look through the weak run of data which can partly be blamed on extremely bad weather.

Australian 3-year government bond yields (implied by futures) rose from 2.98% to 3.05%.  The 10-year yield rose from 4.08% to 4.15%.

Foreign Exchange:

The US dollar index rose by around 0.5% in overnight trade. 

EUR/USD fell from 1.3763 to 1.3686.  Disappointing Eurozone PMI and German wholesale inflation data hurt the single currency. 

USD/JPY rose from 101.67 to 102.42.  Meanwhile, AUD/USD recouped most of its post-China PMI losses, rising from 0.8939 to 0.8995. 

NZD also rebounded from 0.8243 to 0.8304.  AUD/NZD slightly extended the post-China data loss, from 1.0845 to 1.0813.


West Texas Intermediate crude slipped from a four-month high after the Energy Information

Administration said US inventories climbed.  Other commodity prices were slightly lower overnight with the CRB index falling slightly.


Full-time average weekly wages slowed to an annual rate of 2.9% in the year to November, from 5.3% in the year to May. 

It tells a similar story of soft wage growth that was reflected in wages data released on Wednesday.


The HSBC-Markit manufacturing PMI fell from 49.5 to 48.3 in the flash estimate for February. It was the lowest reading in eight months. 

Activity indicators around the Chinese Lunar New Year should be treated with caution, although prospects are for growth in China to soften this year. 

That said, consensus estimates are for growth to remain above 7%, which would still be a healthy rate of growth.


The Eurozone PMI composite slipped from 52.9 to 52.7 in the advance February report. 

The manufacturing PMI was down from 54.0 to 53.0 and the services PMI was little changed at 51.7.
Germany's producer prices index (PPI) contracted by 1.1% in the year to January, representing a new cycle low. 

This outcome is certain to add to concern that low inflation is going to persist for some time, across the Eurozone.


Japan posted a record trade deficit in January of ¥2.79 trillion, slightly larger than consensus estimates for a ¥2.49 trillion deficit. 

Japan's growing reliance on overseas oil saw imports grow 25.0% in the year to January.  Meanwhile, exports grew at 9.5% in the year to January. 

While a weaker yen should provide further support to export growth, in the meantime, it is boosting the cost of imports. 

New Zealand:

The ANZ-Roy Morgan consumer confidence index fell 2.1% in February from a seven-year high in January.

The index remains comfortably in the optimistic territory (above 100) at 133.0, suggesting that the upswing in New Zealand economy is still keeping consumers upbeat. 

United Kingdom:

The CBI industrial trends survey showed new orders rose from -2 to 3 in February, which is near the middle of the -4 to 12 range for this index recorded since September last year (December's result of 12 was the highest reading yet this century; and excluding late 2013, February was the second strongest reading in six years). 

But despite this, official industrial production data for the UK remain lacklustre, running at a modest annual pace of 1.8%.

United States:

The Markit Economics preliminary factory index increased to 56.7 in February, from a final reading of 53.7 last month.  Both production and new orders expanded at faster rates than in January.

A report from the Federal Reserve of Philadelhia showed manufacturing in the area covering eastern Pennsylvania, southern New Jersey and Delaware unexpectedly contracted. 

The Philadelphia Fed factory index tumbled from 9.4 to -6.3 in February, reflecting a 10-point and 22-point declines in orders and shipments, respectively. 

It also reflects a 5-point fall in the jobs sub-index.  The bad weather is likely a key factor behind these soft outcomes.

Consumer prices rose by 0.1% in January, after a 0.2% gain in February.  Both headline and core CPI grew by 1.6% in the year to January.

Initial jobless claims edged lower by 3k to 336k in the week ending February 15.  The four-week moving average for claims stands at 337k, which is the highest since July last year, excluding those periods of seasonality that regularly distort this series.

In other US economic data, the leading index rose by 0.3% in January.  Only three of the ten components that make up this index rose in January, however.

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