Australian Stock Market Report - Morning 28/1/2011
US pending home sales rose 2.0pct in December, above forecasts for a 1.0pct gain. US durable goods orders fell by 2.5pct in December, but was up 1.4pct excluding defence goods and aircraft. And US jobless claims spiked 51,000 higher to 454,000 in the latest week due to the effects of significant snow storms and seasonal volatility.
Standard and Poor´s has cut Japan´s credit rating for the first time since 2002, lowering the rating from AA to AA-minus.
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European shares rose on Thursday with banking stocks leading the way. The Spanish government continues to push for reform of its savings banks and it has struck a deal with unions to delay retirement for most workers. The FTSEurofirst index rose by 0.2pct, but while the UK FTSE lost 0.1pct, the German Dax was higher by 0.4pct.
US sharemarkets were choppy on Thursday with the Dow Jones index holding in a 48 point range. While investors liked earnings results from Caterpillar and Qualcomm, they were disappointed by results from AT&T and Procter & Gamble. And shares in Microsoft rose 0.3pct after the company released earnings just before the bell. At the close of trade the Dow Jones index was up 4pts or less than 0.1pct with the S&P 500 up 0.2pct and the Nasdaq was higher by 16pts or 0.6pct.
US treasury prices rose on Thursday (yields lower) after a successful sale of $29 billion of seven-year notes. The Federal Reserve also bought $5.79bn of Treasuries maturing in the next 2-3 years. US 2yr yields fell by 4pts to 0.59pct and US 10yr yields fell by 2pts to 3.39pct.
Major currencies were mixed against the US dollar in European and US trade but the Japanese yen fell after the rating downgrade. The Euro lifted from US$1.3640 to US$1.3755 over European and US trade and was near US$1.3730 in late US trade. The Aussie dollar eased from US99.70c to US98.75c in European trade but was near US99.25c in late US trade. And the Japanese yen eased from 82.10 yen per US dollar to JPY83.15, and was near JPY82.85 in late US trade.
US crude oil prices fell on Thursday after the chief executive of Kuwait Petroleum Corp said OPEC may need to raise output to cap prices. The Nymex crude oil fell by US$1.69 to US$85.64 a barrel.
Base metal prices were mixed on the London Metal Exchange on Thursday. Lead rose 2.5pct, aluminium lifted 2.0pct and copper rose 1.2pct but zinc lost 0.8pct and nickel was flat. And the price of gold slumped to four-month lows due to reduced physical demand for safe-haven assets. The Comex gold futures price fell by US$14.60 an ounce to US$1,318.40. In after hours trade gold fell to US$1311 an ounce.
Ahead: In Australia, no major events are scheduled. In the US, economic growth (GDP) data is released together with the employment cost index and final consumer sentiment figures.