MORNING REPORT
(6am AEST)

US initial jobless claims edged up by 8,000 to 365k in the final week in July. The 4-week average of jobless claims - a better indication of the underlying trend in the labour market - eased modestly to 365,500. US factory orders fell by 0.5pct in June, well below expectations for a 0.5pct rise. Orders for non-defence capital goods excluding aircraft - seen as a measure of business confidence and spending plans - slipped 1.7pct in June.

The European Central Bank kept its refi rate on hold at 0.75pct. Overnight deposit rates were also left unchanged. ECB president Mario Draghi indicated that policymakers were prepared to "undertake outright open market operations". Draghi also suggested that various other non-standard tools would be reviewed in coming weeks, but declined to provide more details on what they were.

European shares ended lower on Thursday in a volatile trading session. Investors were disappointed by the ECB which did not take any bold action. The Euro zone banking index bore the brunt of the weakness with the sector down 6.4pct. The benchmark FTSEurofirst 300 index fell by 1.2pct with the UK FTSE down 0.9pct while the German Dax was lower by 2.2pct.

US sharemarkets fell for a fourth day on Thursday. The lack of fresh action from the ECB and the upcoming non-farm payrolls data gave investors a reason to clear positions. At the close of trade, the Dow Jones finished lower by 92pts or 0.7pct with the S&P 500 down by 0.7pct while the Nasdaq lost 10pts or 0.4pct.

US treasuries rose on Thursday (yields lower). The demand for safe-haven US government bonds gained ground after the ECB offered no fresh plan to shore up the euro zone banking system. US 2yr yields fell by 1pts to 0.227pct and US 10yr yields fell by 5pts to 1.478pct.

The Euro fell for a second straight session against the greenback after ECB president dashed hopes of immediate policy action. The Euro fell from highs near US$1.2370 to US$1.2135 and closed US trade near US$1.2180. The Aussie dollar fell from highs near US105.60c to US104.40c and ended US trade near US104.55c. And the Japanese yen held between 78.55 yen per US dollar to JPY78.10 and ended US trade near JPY78.20.

Benchmark crude oil prices eased for the third straight session as the disappointment following the lack of ECB action outweighed the 6.52 million drop in US crude stockpiles. Brent crude fell by US6c or 0.1pct to US$105.90 a barrel. US Nymex crude fell by US$1.78 or 2pct to US$87.13 a barrel.

Base metal prices were weaker on Thursday. Investors unwound positions across commodities following the lack of ECB action and ahead of the non-farm payrolls numbers. And the gold price fell for the third session. The August Comex gold futures price fell by US$16.60 an ounce to US$1,590.70 an ounce.

Ahead: In Australia, the performance of services index is released. In the US, non-farm payrolls are released.