Australian Stock Market Report – Morning 4/23/14

MORNING REPORT
(7am AEST)

In US economic data, existing home sales fell by just 0.2% to a 4.59 million annual rate in March, above forecasts for a result near 4.55m. The FHFA home price index rose by 0.6% in February to stand 6.9% higher than a year ago. The Richmond Federal Reserve index rose from minus 7 to +7 in April.

The People´s Bank of China has cut the reserve requirement ratio for rural banks to support the farm sector.

European shares rose on Tuesday, supported by takeover activity in the pharmaceuticals sector. Shares in AstraZeneca rose by 4.7% on newspaper reports of a 60 billion pound (US$101 billion) takeover bid by Pfizer. Shares in GlaxoSmithKline rose by 5.2% after it agreed to sell its oncology products to Novartis for $14.5 billion. The FTSEurofirst 300 index rose by 1.3%, with the German Dax higher by 2.0% while the UK FTSE rose by 0.9%. But mining shares were mixed in London trade with shares in BHP Billiton up by 0.3% while shares in Rio Tinto fell by 1.0%.

US sharemarkets rose on Tuesday in response to takeover activity in global pharmaceuticals and positive US economic data. The Dow Jones index rose by 65 points or 0.4% with the S&P 500 up by 0.4%, while the Nasdaq rose for the sixth straight day, up by 39.9 points or 1.0%.

US long-term treasury prices were little-changed on Tuesday as investors focussed on new bond supply. US Treasury sold US$32 billion of two-year notes on Tuesday and will sell $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.US 2 year yields were steady at 0.41% while US 10 year yields were steady at 2.72%.

Major currencies ended European and US trade little changed against the greenback compared with the Asian close. The Euro held between US$1.3785 and US$1.3825, before ending US trade around US$1.3805. The Aussie dollar rose from lows near US93.45c to around US93.75c before finishing US trade around US93.65c. And the Japanese yen held between 102.41 yen per US dollar and JPY102.65 and was near JPY102.58 at the US close.

World oil prices fell on Tuesday on expectations that data would show that US crude oil inventories rose last week to near record highs. But Brent crude fell by less than US Nymex on continued worries about the geopolitical situation in Ukraine. Brent crude fell by US68c or 0.6% to US$109.27 a barrel while US Nymex fell by US$2.24 or 2.1% to US$102.13 a barrel.

Base metal prices rose by up to 2.3% on the London Metal Exchange on Tuesday with nickel leading the way although copper rose by just 0.3%. The Comex gold futures quote fell for the third straight session, down by US$7.40 an ounce or 0.6% to US$1,281.10 per ounce. Iron ore fell by US80c to US$112.50 a tonne on Tuesday.

Ahead: In Australia the Consumer Price Index is published. In the US, the weekly mortgage market index is released together with the Markit purchasing managers index and new home sales data. In China, the ´´flash´´ manufacturing gauge is released.

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