Am report 25th March 15

ajz

Global Wrap - We Call The S&P/ASX 200 Down 13
European stocks put in a modestly positive session as U.S. cash continues to flood into the zone in a rotation out of the U.S. and
into Europe based on the divergent monetary policies of the respective central banks. Last week alone, U.S.-based funds sent a
record amount, $3.9 billion into Europe equities. That's according to EPFR Global, a research firm that tracks fund flow data. U.S.
investments going to Europe thru mid-March have already outpaced February's total and are triple the size of January's figure.
The Stoxx600, buoyed by the flows, ended up 0.31%. The story was not so bright for the stateside session however. Despite a
reasonable positive data set the S&P500 fell 0.61% albeit from near recent record highs. It’s hard to put a finger on any one
catalyst for the overnight decline.
The last 24 hours have been notable for the most recent glimpse of the health of global manufacturing scene. The spotlight fell
first on China with their return to a contracting manufacturing scene (49.2 v 50.5 expected). Europe was measurably brighter with
the sharply lower EUR of recent months providing a boost. The pan-Europe measure came in at 51.9 v 51.5 expected whilst the
European powerhouse of Germany was even better at 52.4 v 51.5 exp. Finally the focus flipped onto the U.S. where their relative
measure came in at 55.3 v 54.6, above expectations and very much in expansion mode.
U.S. new home sales rose to the highest level in seven years in February. Sales of newly built single-family homes increased
7.8% from a month earlier which is the highest level since February 2008. Figures for the prior month were also revised up to a
rate of 500,000 from an initial estimate of 481,000.
U.S. inflation rebounded in February as gasoline prices rose for the first time since June and there were also signs of an uptick in
underlying inflation pressures. The Consumer Price Index increased 0.2% last month after dropping 0.7% in January, ending 3
straight months of declines in the index. The more important ‘core’ measure stayed stable at +1.7%, neither dismissing the idea of
Fed hikes but just as importantly not enough it would seem to get them over the line to start any hiking program.
U.S. treasury yields fell again, the 10 year note yield declining from 1.91% to 1.86% on the day. Since early March the yield on the
benchmark note has dropped, somewhat incredibly given the Fed’s removal of ‘patient’ (and the implied movement closer to
hiking), from 2.26% to 1.86%.
NZ’s Fonterra reaffirmed its current pay-out forecast of NZ$4.70 per kilo of milk solids.