Australian Stock Market Report – Morning 4/29/14

MORNING REPORT
(7.00am AEST)

In US economic data, the pending home sales index rose by 3.4% to 97.4 in March while the Dallas Federal Reserve Business index rose from +4.9 points to +11.7 points in April.

The United States and Europe have launched fresh sanctions, asset freezes and visa bans on Russian government officials and companies.

European shares rose on Monday in response with merger and acquisition news. In the pharmaceuticals sector, shares in AstraZeneca rose by 14.4% after rival Pfizer contacted the company on Saturday seeking further takeover talks in a deal that could be worth US$100 billion. The FTSEurofirst 300 index rose by 0.3%, with the German Dax up by 0.5% while the UK FTSE rose by 0.2%. But mining shares were lower in London trade with shares in BHP Billiton down by 1.1% while shares in Rio Tinto lost 2.8%.

US blue chip shares rebounded from lows on Monday with investor sentiment buoyed by takeover action and good economic news. But shares in Bank of America fell by 6.3% after the company said it would suspend a share buy-back. The Dow Jones index rose by 87 points or 0.5% after holding in a 188 point range over the session. The S&P 500 was up by 0.3%, but the Nasdaq lost 1.2 points or less than 0.1%.

US long-term treasury prices were mixed on Monday as traders mulled a firmer sharemarket, encouraging US economic data and new sanctions slapped on Russian officials. US 2 year yields fell by 1 point to 0.438% while US 10 year yields rose by 3 points to 2.70%.

Major currencies weakened against the US dollar over the European and US sessions on Monday. The Euro rose from lows near US$1.3815 to highs near US$1.3880, before easing to US$1.3840 and ended US trade around US$1.3850. The Aussie dollar eased from highs near US93.15c to US92.45c before finishing US trade around US92.55c. And the Japanese yen eased from lows near 102.15 yen per US dollar to JPY102.60 before ending US trade near JPY102.50.

World oil prices were mixed on Monday. Brent crude fell on expectations of higher output in Libya. Reuters reported that Libya lifted force majeure (a waiver to prevent carrying out of delivery contracts) at the eastern oil port of Zueitina. But Nymex rose in response to continued tensions in Ukraine and firmer US economic data. Brent crude fell by US$1.46 or 1.3% to US$108.12 a barrel while US Nymex rose by US24c or 0.2% to US$100.84 a barrel.

Base metal prices fell by up to 1.4% on the London Metal Exchange on Monday with aluminium and nickel leading the way. But zinc bucked the trend, up by 0.5%. The Comex gold futures quote fell by just US$1.80 an ounce or 0.1% on Monday to US$1,299.00 per ounce. Iron ore fell by US$2.40 a tonne to US$108.60 a tonne on Monday.

Ahead: In Australia no major economic data is scheduled. Wesfarmers releases its third quarter update. In the US, data on weekly chain store sales is issued with consumer confidence and CaseShiller home prices.

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