Australian Stock Market Report
The US ISM services index rose from 53.8 to 54.3 in July - above expectations for a result near 53.0. Readings for both new orders and employment rose. The ADP private sector employment report showed that jobs grew by 42,000 in July, ahead of forecasts centred on a gain of 39,000. Planned job cuts rose from 39,558 to 41,676 in July according to Challenger, Gray & Christmas. But job cuts for the first seven months are 64pct down on a year ago.
European shares were again mixed on Wednesday. While US economic data was encouraging, bank earnings results disappointed. Shares in Standard Chartered fell by 5.2pct. The FTSEurofirst index was largely unchanged with the UK FTSE down 0.2pct while the German Dax was higher by 0.4pct.
US sharemarkets lifted to fresh 10-week highs on Wednesday in response to positive economic data and earnings news. Shares in Priceline rose 22pct after its earnings result. Around 80pct of S&P 500 companies have reported results with earnings up 37.3pct on a year ago. The Dow Jones rose by 44pts or 0.4pct with the S&P 500 up 0.6pct and the Nasdaq gained 20pts or 0.9pct. After the bell News Corp reported earnings of 33c a share, ahead of forecasts of 20c a share.
US longer-term treasuries fell on Wednesday (yields higher) after economic data encouraged investors to move money back into stocks from the bond market. Traders are also preparing for another increase in bond supply next week. US 2yr yields rose 3pts to 0.57pct and US 10yr yields rose by 4pts to 2.95pct.
The Euro and Japanese yen fell against the US dollar over the European and US sessions but the Aussie bucked the trend. The Euro eased from highs near US$1.3230 to US$1.3130, ending US trade near US$1.3155. The Aussie dollar rose from US90.95c to near US91.80c, ending US trade near US91.65c. And the Japanese yen eased from 85.40 yen per US dollar to JPY86.35, ending US trade near its weakest levels.
US crude oil was slightly lower on Wednesday for the first time in five days. While economic data was firmer than expectations, US gasoline and distillate stockpiles rose in the last week. The Nymex crude oil contract fell by US8c to US$82.47. London Brent crude fell by US48c to US$82.20 a barrel.
Base metal prices rose on the London Metal Exchange on Wednesday in response to positive US economic data. Metals lifted between 1.0-1.7pct with zinc doing best. And the Comex gold price rose for the sixth straight session, lifting US$8.40 an ounce to US$1,195.90. Gold traded from US$1,187 to US$1,205.50 an ounce.
Ahead: In Australia, Rio Tinto and Tabcorp release earnings. In the US weekly data on jobless claims are released.