MORNING REPORT
(7.00am AEST)

US economic growth slowed from a 3.1pct annual pace in the fourth quarter to 1.8pct in the March quarter. Economists had expected growth of around 2pct. US jobless claims rose by 25,000 to 429,000 in the last week.

US pending home sales rose by a larger than expected 5.1pct in March. The previously released February result was revised down from a gain of 2.1pct to 0.7pct.

European shares closed at a fresh eight-week highs on Thursday as robust earnings continued to support the bid for equities. Out of the 53 companies on the STOXX Europe 600 that have reported first-quarter results, 57 percent of them have met or beat analyst expectations. Financial stocks were in demand after Germany´s biggest lender Deutsche Bank (up 4.3pct) beat profit forecasts. The FTSEurofirst index rose 0.4pct. The German Dax gained 1pct and the UK FTSE remained flat.

US sharemarkets rallied on Thursday as healthy earnings offset the modestly weak economic growth figures. Better than expected earnings in the insurance sector resulted in the KBW insurance index rising 2pct. The Dow Jones Transportation Index rose 2.1pct to a record high. The Dow Jones index rose 72pts or 0.6pct with the S&P 500 higher by 0.4pct while the Nasdaq gained 3pts or 0.1pct and closed at a 10yr high.

US treasuries rallied on Thursday (yields lower) as the weaker-than-expected US growth data reinforced views that the Fed will leave interest rates unchanged until next year. However gains were capped with a surprisingly weak $29bn auction of 7yr notes. US 2yr yields fell by 3pts to 0.625pct and US 10yr yields fell by 5pts to 3.312pct.

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The US dollar traded sideways against major currencies after the recent bout of weakness. The Euro reached early highs near US$1.4855 to US$1.4775, closing US trade near US$1.4820. The Aussie dollar traded between US109.35c to US108.60c, ending US trade near US109.30c. And the Japanese yen traded between 81.75 yen per US dollar to near JPY81.45, ending at JPY82.50.

US crude oil prices rose on Thursday to close at a 31-month high. The weaker US dollar continued to support the demand for oil. The Nymex crude oil contract rose by US10c or 0.1pct to US$112.86 a barrel. The London Brent crude eased by US11c to US$125.02 a barrel.

Base metal prices were mostly higher on the London Metal Exchange on Thursday. The Fed´s commitment to keep interest rates low and US dollar weakness, attracted investors to riskier asset groups. And the Comex gold futures price rose to fresh record highs, up US$14.10 an ounce to US$1,531.20.

Ahead: In Australia, private sector credit and RPdata-Rismark house price figures are released. In the US, personal income/spending and consumer confidence is released.

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