Australian Stock Market Report – Morning 4/10/14

US MORNING REPORT
(6am AEDT)

In US economic data, wholesale sales rose by 0.7% in February with inventories up 0.5%. The sales data was short of forecasts centred on a 1.0% increase. The weekly index of mortgage activity fell 1.6% with purchases up and refinancing down.

Minutes from the last Federal Reserve meeting showed that members were unanimous in dropping unemployment and inflation thresholds for raising interest rates, saying that ´´new language should be qualitative in nature´´ or more general, in determining how long to maintain low interest rates.

European shares rose on Wednesday. The FTSEurofirst 300 index rose by 0.4% with the UK FTSE up by 0.7%, while the German Dax rose by 0.2%. But mining shares were mixed in London trade with shares in BHP Billiton up by 0.1% while shares in Rio Tinto fell by 1.0%.

US sharemarkets rose on Wednesday with investors comforted that interest rates would stay low for some time. The Dow Jones index rose by 181 points or 1.1%, putting on more than 100 points after the Fed minutes. The S&P 500 was up by 1.1%, while the Nasdaq lifted by 71 points or 1.7%.

US treasury prices were mixed on Wednesday. Yields fell at the short end of the curve in response to the Fed minutes but rose at the longer end of the curve as investors moved funds into equities. US Treasury sold $21 billion of 10-year notes and will sell $13 billion of 30-year bonds on Thursday. US 2 year yields fell by 4 points to 0.363% while US 10 year yields were steady near 2.69%.

Major currencies rose against the greenback after the release of the Federal Reserve minutes on Wednesday. The Euro lifted from lows around US$1.3780 to near US$1.3860, before ending US trade around US$1.3855. The Aussie dollar rose from lows near US93.45c to highs of US93.98c before finishing US trade around US93.85c. And the Japanese yen strengthened from 102.13 yen per US dollar to JPY101.71 and was near JPY101.95 at the US close.

World oil prices rose on Wednesday. While a weaker dollar generally supported commodity prices, data also showed that gasoline stocks fell by 5.2 million barrels in the US last week. Brent crude rose by US31c or 0.3% to US$107.98 a barrel while US Nymex rose by US$1.04 or 1.0% to US$103.60 a barrel.

Base metal prices were generally firmer by up to 2.4% on the London Metal Exchange on Wednesday with aluminium and nickel leading the way. But zinc fell 0.3% and copper lost 0.7%. The gold price fell on Wednesday before the Federal Reserve minutes but lifted afterwards. The Comex futures quote fell by US$3.20 an ounce to US$1,305.90 per ounce but it rebounded to US$1,310.20 in after hours trade. Iron ore rose by US$1.20 to US$119.40 a tonne on Wednesday.

Ahead: In Australia monthly employment data is scheduled. In the US, data on weekly claims for unemployment insurance is released together with import and export prices and the monthly Federal Budget. In China, March trade data is released.
.

[Kick off your trading day with our newsletter]