Australian Stock Market Report 7/22/2011
The Philadelphia Fed business activity index rose from -7.7 to +3.2 in June. The increase was the first since March. Encouragingly across the sub-indices, new orders, hiring and shipments recorded a healthy improvement. While prices paid by manufacturers was the lowest in nine months. US jobless claims rose by 10,000 to 418,000 last week. The Conference Board leading index rose by 0.3pct in June.
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Euro Zone leaders have agreed that the total official financing package for the Greece bailout will be around €109 billion. The private sector would provide a net €37 billion. The European Financial Stability Facility will provide longer dated loans at lower interest rates around 3.5pct.
European shares rose for the third straight day on Thursday closing near two week highs. Banks were the standout gainers ahead of details surrounding the bailout package for Greece. The STOXX 600 Banks index rose by 4.1pct. The Greek bank sector rose by 7.7pct. The FTSEurofirst index rose by 0.8pct with the German Dax higher by 1pct and the UK FTSE up 0.8pct.
US sharemarkets rallied on Thursday as signs of progress on the US debt talks and concrete action from European leaders buoyed investor sentiment. The Dow Jones rose by 153pts or 1.2pct with the broader S&P 500 up by 1.4pct and the Nasdaq gained 20pts or 0.7pct. After the bell Microsoft posted earnings that beat analyst expectations.
US treasuries fell on Thursday as investor risk appetite improved following the draft plan for the European Financial Stability Facility. US 2yr yields rose by 2pts to 0.399pct and US 10yr yields rose by 8pts to 3.014pct.
The Euro rallied to fresh two weak highs against the US dollar on Thursday following the agreement by EU leaders to create the equivalent of a European Monetary Fund. The Euro rose from lows near US$1.4140 to US$1.4410, ending the US session near US$1.4375. The Aussie dollar rose from lows near US106.90c to around US108.50c, before ending US trade near US108.35c. And the Japanese yen lifted from 78.95 yen per US dollar to JPY78.35, ending US trade at JPY78.40.
US crude oil prices rose again on Thursday after confirmation that the IEA will not be releasing anymore emergency oil stockpiles. Nymex crude oil rose by US99c or 1pct to US$99.13 a barrel while London Brent crude fell by US64c to US$117.51 a barrel.
Base metal prices were mixed on the London Metal Exchange on Thursday. Copper prices fell 0.8pct following the contraction in Chinese factory activity in July. And the gold price slipped further from record highs with Comex gold down by US$9.90 an ounce to US$1,587.
Ahead: In Australia, import and export prices for the June quarter are released. In the US, GDP and University of Michigan confidence figures are released. Earnings from McDonalds, Schlumburger, and General Electric are slated for release.
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