The market is down 30 points.

The Dow Jones was up 135 at 16,458 — The market opened strongly, fell after weak manufacturing data, then rose following dovish commentary from Janet Yellen. The market was also supported by end-of-quarter “window dressing,”  and optimism about potential economic stimulus in both the euro zone and China. Volume was above average in a 150 point range.

US Fed Chair Janet Yellen lifted stocks when she said that the Fed’s “extraordinary commitment” — in the form of massive bond-buying and ultra-low interest rates — was “still needed, and will be for some time.” She said the economy was “considerably short” of the Fed’s goals, emphasising how jobs lost since the 2008 financial crisis have yet to come back, and have left millions suffering in the aftermath.

US economic data was weak — The Chicago PMI fell to 55.9 (an increase to 60.1 was expected), the lowest level since August, resuming the recent trend of slower regional growth.

A weekend phone call between Vladimir Putin and President Obama was viewed as a step towards a diplomatic solution to the situation in Ukraine. Russia was also withdrawing some troops on the Ukrainian border — the number withdrawn was not reported but earlier official estimates had the military build-up reaching 30,000 to 40,000 troops.

Chinese state media reported that the Beijing was preparing measures to bolster the economy.

The Italian market rose 0.9% (it’s up 14% in the first quarter of 2014, the best performing European index), led by banks after news that they will not require state funds.

The Australian dollar rose and is now trading at US 92.72c.

Iron ore rose US$4.50 to US$116.80 a tonne.

Gold fell US$10.10 or 0.78% to US$1283.70 an ounce.

STORIES

  • RBA Meeting today — The current rhetoric from the last two meetings has included the sentence “On present indications, the most prudent course is likely to be a period of stability in interest rates”. Combined with Glenn Stevens’ recent comments which included a lack of concern about the high A$ the general impression is that we have seen the low on interest rates this cycle. We are also likely to hear a repeat of the line about “promising signs” from the non-mining segment of the economy although for a body responsible for managing Australian economic confidence you would expect the RBA to say that. It may even be true. There is now a debate over the A$ as to whether it is being priced as a commodity/China play or on a US/Australian carry trade basis (priced on interest rate differential). We have been assuming the former in the long term but it looks like the latter in the short term.
  • A big bounce in iron ore overnight — Up $4.50 to $116.80. BHP was down 0.4% in the US and RIO was up 1.8%. Chinese iron ore inventories have hit a five year high this year.
  • Prana Biotechnology (PBT) — Down 76% after the company announces the results of Alzheimer’s Trial.