MARKETS SPECTATOR: Easing pleases yields

“Don’t fight the Fed” is a well known maxim in markets. If you add the Bank of England, the European Central Bank and the Bank of Japan, each of whom have lowered interest rates to historic lows while printing trillions of dollars in an effort to stimulate economic activity, there is little doubt that money will flow into Australian stocks that offer yield.

Bank shares seem likely to benefit from the global search for yield, along with a wide swathe of other shares such as Tabcorp, Telstra, real estate investment trusts, ASX Ltd and AMP.

Still, Chinese imports have slowed, suggesting that demand for Australian iron ore and coal may be less than miners had hoped. Base metals prices fell globally as much as 4 per cent on April 15, with gold falling by 4.1 per cent to $US1,501 a troy ounce.

Rio Tinto's shares in London on fell 1.9 per cent on Friday after concerns a landslide in its US copper operations could cost the company $US1 billion in lost production and infrastructure costs.

Moreover, in another event that could hit big miners, reports over the weekend that Beijing had reported its first death from the H7N9 avian influenza may further dampen economic activity as people become spooked. The World Health Organization says the whole of China’s east coast may be touched by the virus. H7N9 has killed 13 people in China as of April 14 – nine in the country’s commercial capital Shanghai.