Australian Stock Market Report
US jobless claims fell by 11,000 to 457,000 in the latest week - broadly in line with economist forecasts. The four-week average level of claims also fell from 457,000 to 452,500. The Kansas City production index rose from +3 to +14 in July.
St Louis Federal Reserve President James Bullard has warned that the central bank´s promise to hold rates at low levels for an ´´extended period´´ could set up a Japanese-style situation of stagnant growth and falling prices.
European shares fell for the second day with weakness in early US trade weighing on prices. The FTSEurofirst index was down by 0.4pct, while the UK FTSE fell by 0.1pct and the German Dax lost 0.7pct. Banking shares drove the weakness while miners also slipped despite higher base metal prices.
US sharemarkets eased on Thursday. A number of US companies noted that deflationary pressures were crimping margins and profitability. Shares in Kellogg and Colgate-Palmolive both fell by almost 7pct after issuing earnings results. The Dow Jones fell by almost 30 points or 0.3pct with the S&P 500 lower by 0.4pct, and the Nasdaq lost almost 13 points or 0.6pct.
US treasuries rose on Thursday (yields lower) as comments on deflationary risks by Fed president Bullard and a number of US companies unnerved traders. US 2yr yields fell by 3pts to 0.58pct and US 10yr yields eased by 1pt to near 2.98pct.
The US dollar eased against major currencies in European and US trade on Thursday. The Euro lifted from US$1.3000 to US$1.3100, before ending US trade at US$1.3070. The Aussie dollar held between US89.75c and US90.40c, ending US trade near US90.00c. And the Japanese yen strengthened from near 87.45 yen per US dollar to JPY86.60, ending US trade near JPY86.90.
US crude oil prices rose for the first time in three days as the US dollar eased, improving the purchasing power of buyers in Europe and Asia. The Nymex crude oil contract rose by US$1.37 or 1.8pct to US$78.36 a barrel while London Brent crude rose by US$1.53 to US$77.59 a barrel.
Base metal prices rose again on the London Metal Exchange on Thursday. While metals finished with gains between 0.9-1.9pct most finished off the day´s highs as US equities markets softened. And the Comex gold price rose for the second day as Fed president Bullard warned of Japanese-style stagnation for the US. Comex gold rose by US$8.00 an ounce to US$1,168.40 and finished just off the day´s highs.
Ahead: In Australia, private sector credit data and the RP Data/Rismark Home Value index are released. In the US, economic growth (GDP) figures and the Employment Cost Index are released.