MORNING REPORT
(6am AEST)

The US economy grew at a 2.2pct annual pace in the first quarter of 2012, down from 3.0pct in December quarter 2011 and slightly below market forecasts centred on a gain of 2.5pct. But consumer sentiment rose to a 14-month high of 76.4 in April, up from 76.2 in March and above market forecasts.

European shares rose on Friday with investors encouraged by solid earnings results in Europe and the US and shrugging off a credit downgrade by Standard and Poor´s. The benchmark FTSEurofirst 300 index rose by 0.7pct with the German Dax up 0.9pct and the UK FTSE up 0.5pct. Over the week the FTSEurofirst 300 index rose by 0.5pct.

US sharemarkets posted modest gains for a fourth straight day on Friday. While economic data was mixed, earnings results continued to encourage. Around 73pct of companies have beaten expectations with their earnings results. Shares in Amazon.com soared by 15.7pct on better-than-expected earnings. At the close of trade, the Dow Jones was higher by 23pts or 0.2pct with the S&P 500 up by 0.2pct while the Nasdaq gained 18pts or 0.6pct. Over the week the Dow rose by 1.5pct with the S&P 500 up 1.8pct and the Nasdaq gained 2.3pct.

US treasuries were flat on Friday. Economic data was mixed but equities and commodities rose. US 2yr yields were flat near 0.26pct and US 10yr yields were flat near 1.94pct. Over the week US 2yr yields were little changed and US 10yr yields fell by 3pts.

Major currencies rose over the European and US sessions after soft economic growth figures left open the door for more economic stimulus. The Euro rose from lows around US$1.3155 to highs near US$1.3270 and ended US trade at US$1.3250. The Aussie dollar rose from lows around US103.50c to US104.75c and ended US trade near US104.70c. And the Japanese yen lifted from 80.89 yen per US dollar to JPY80.21 and was near the strongest levels in late US trade.

Benchmark crude oil prices were little changed on Friday. The US dollar lost ground and equities markets rose but traders were content to square positions after gains over the week. US Nymex crude rose by US38c or 0.4pct to US$104.93 a barrel and rose by 1.8pct on the week. London Brent crude fell by US9c to US$119.83 a barrel and rose almost 1pct on the week.

Base metal prices posted modest gains on the London Metals Exchange on Friday in line with equities markets. Metals rose between 0.3-1.3pct although nickel bucked the trend, easing by 0.6pct. Over the week metals rose between 0.6-4.7pct with lead up the least and tin faring the best. And the gold price rose for the fourth straight day on option-related buying with the June Comex gold futures price higher by US$4.30 or 0.3pct to US$1,664.80 an ounce. Gold was up 1.3pct over the week.

Ahead: In Australia, the monthly inflation gauge, private sector credit, new home sales and RP Data-Rismark home prices are released. In the US, personal income/spending data are released together with the Chicago purchasing managers index, the Midwest manufacturing index and Dallas Fed index.