Australian Stock Market Report - Morning 07/29/2011
US jobless claims (new claims for unemployment insurance) fell from 422,000 to 398,000 in the latest week, well below expectations for a result near 415,000. The pending home sales index rose from 88.8 to 90.9 in June. But the Kansas City Fed manufacturing index eased from +22 to +2 in July.
European shares were mixed on Thursday. While there was strength in the banks sector, there was weakness in the chemicals sector after disappointing results from BASF and Bayer. The STOXX Europe 600 banking index was up 1.3pct. The FTSEurofirst index rose by 0.1pct but while the German Dax fell by 0.9pct, the UK FTSE gained 0.3pct.
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US sharemarkets retreated in the last 70 minutes of trade as traders squared positions ahead of a House of Representatives vote on Republican plans to reduce the budget deficit and raise the debt ceiling. The Dow Jones fell by 62pts or 0.5pct and lost over 80 points in the last 70 minutes of trade. The S&P 500 was down by 0.3pct. But the Nasdaq ended higher by 1.5pts or 0.1pct.
US treasuries rose on Thursday (yields lower), continuing the zig-zag run over the past week. Simply this week has been about traders taking positions and taking profits as they await a deal on the budget deficit. US 2yr yields fell by 3pts to 0.422pct and US 10yr yields fell by 2pts to 2.956pct.
The US dollar was generally firmer against major currencies at the end of US trade compared with the Asian close. The Euro fell from highs near US$1.4400 to US$1.4255, before closing at US$1.4310. The Aussie dollar eased from near US110.70c to around US109.75c, ending US trade near US109.90c. And the Japanese yen weakened from around 77.60 yen per US dollar to JPY77.90, before ending US trade near JPY77.75.
Benchmark crude oil prices ended little-changed on Thursday in choppy trading. Investors weren´t keen on taking fresh positions given on-going uncertainty about a US budget/debt deal. But traders and investors were watching progress of a tropical storm in the Gulf of Mexico that led to production shutdowns. Nymex crude oil rose by US4c to US$97.44 a barrel and London Brent crude fell by US7c to US$117.36 a barrel.
Base metal prices were mixed on the London Metal Exchange on Thursday. While US economic data was encouraging, this was offset by jitters on the US deficit/debt talks and a firmer greenback. Lead lost 1.3pct, tin lost 0.9pct and copper fell 0.4pct but other metals rose up to 0.7pct. And the gold price eased with Comex gold down by US$1.70 an ounce to US$1,613.40.
Ahead: In Australia, the RP Data/Rismark home price index is released together with private sector credit. In the US, GDP data, the employment cost index, consumer sentiment and the Chicago purchasing managers index is released.
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