Australian Stock Market Report
US Philadelphia Fed business activity index fell from +5.1 to minus 7.7 in August - marking the weakest reading in 13 months. The sub-indices also highlighted significant weakness. Employment, new orders and shipments all posted negative readings.
US jobless claims rose by 12k to 500k in the past week - a nine month high and the third straight week of gains. The number of people remaining on jobless benefits after drawing an initial week of aid rose by 260k to 4.75 million.
European shares fell to one-month lows on Thursday. Shares had traded higher earlier in the session after Germany´s central bank revised up economic growth forecasts. However the disappointing US economic data weighed on markets mid-way through the trading session. Financial shares were among the top losers. The FTSEurofirst index fell by 1.5pct with the UK FTSE down 1.7pct and the German Dax eased by 1.8pct.
US sharemarkets fell to their lowest levels in nearly a month on Thursday. The latest economic data added further weight to investor worries that the economy was stalling. Trading volumes remained low. M&A activity didn´t help to stem the weakness in markets. Intel made a bid to buy MacAfee for $7.68 billion in cash. The Dow Jones finished lower by 144pts or 1.4pct with the S&P 500 down 1.7pct and the Nasdaq lower by 37pts or 1.7pct.
US treasuries rallied (yields lower) on Thursday. Investors trimmed exposure of risky assets as concerns about a double-dip slowdown were heightened. US 2yr yields fell by 1pt to 0.49pct and US 10yr yields fell 6pts to 2.58pct.
The Euro rallied against the US dollar, while commodity currencies weakened on Thursday. The Euro rose from US$1.2775 to US$1.2895, ending US trade near US$1.2820. The Aussie dollar fell from highs near US90.10c to US89.05c, ending US trade near US89.20c. And the Japanese yen traded between 85.90 yen per US dollar to JPY84.90, ending US trade near JPY85.30.
US crude oil prices fell on Thursday as the rise in jobless claims and weakening activity levels fuelled worries that the economic recovery is stalling. Also the sharp rise in inventory level continued to weigh on prices. The Nymex crude oil contract fell by US99c or 1.3pct to US$74.43. US London Brent crude fell by US$1.17 to US$75.30 a barrel.
Base metal prices were lower on the London Metal Exchange on Thursday as investors exited riskier assets such as commodities. Zinc and aluminium lost 2.1pct, while copper gave back 1.1. And the Comex gold price hit 7-week highs, initially driven by technical buying and safe-haven flows in the latter part of the session. Gold rose by US$4 an ounce to US$1,235.40.
Ahead: In Australia, no economic data is released. Billabong, and Consolidated Media are amongst those issuing profit results. In the US no economic data is released.