Australian Stock Market Report – Morning 3/7/14

US MORNING REPORT
(8am AEDT)

In US economic data, new claims for unemployment insurance (jobless claims) fell by 26,000 to 323,000 in the latest week. Economists had tipped a result near 338,000. And factory orders fell by 0.7% in January, a weaker result than the 0.4% decline expected by economists. Productivity grew at a 1.8% annual pace in the December quarter with labour costs down 0.1%. Economists had tipped a 2.5% lift in productivity and 0.9% fall in labour costs.

The European Central Bank left its benchmark refinancing rate unchanged as expected at 0.25%. The Bank of England left its Bank rate at 0.5%.

European shares were broadly flat on Thursday as investors awaited the pivotal US jobs data. The FTSEurofirst 300 index was up by 0.04%, the UK FTSE rose by 0.2% and the German Dax rose by 0.85 points or less than 0.1%. Mining shares lifted in London trade with shares in BHP Billiton up by 0.3% while Rio Tinto gained 1.3%.

US blue-chip shares rallied early in trade on Thursday and then generally tracked sideways. Investors generally weren´t keen to take on new positions ahead of the jobs report. At the close of trade, the US Dow Jones was up by almost 62 points or 0.4% with the S&P 500 up by 0.2% but the Nasdaq lost almost 6 points or 0.1%.

US longer-term treasury prices fell slightly on Thursday (yields higher) as investors positioned ahead of Friday´s employment report. The better-than-expected data on unemployment benefits lessened supported for government bonds. US 2 year yields were steady at 0.345% while US 10 year yields lifted 3 points to 2.737%.

The Euro and commodity currencies rose against the greenback over the European and US sessions while the Japanese yen eased. The Euro lifted from lows near US$1.3720 to near US$1.3870 and was around US$1.3855 in afternoon US trade. The Aussie dollar rose from near US90.05c to highs near US91.10c and was trading near US90.85c in afternoon US trade. And the Japanese yen weakened from near 102.59 yen per US dollar to JPY103.15 and was trading near JPY103.00 in afternoon US trade.

World oil prices rose on Friday, rallying in the last hour of trade. Brent crude rose by US34c or 0.3% to US$108.10 a barrel while US Nymex crude rose by US11c to US$101.56 a barrel.

Base metal prices were generally higher up to 1.4% on the London Metal Exchange on Thursday with aluminium and nickel leading the gains. But zinc lost 0.2%. The Comex gold futures price rose as the greenback fell, up by US$11.50 an ounce or 0.9% to US$1,351.80 per ounce. Iron ore rose by US20c on Thursday to US$116.90 a tonne.

Ahead: In Australia, the Reserve Bank Governor delivers testimony to the House of Representatives economics committee. In the US, non-farm payrolls (employment) data is released.

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