Australian Stock Market Report – Morning 4/9/14

US MORNING REPORT
(6am AEDT)

In US economic data, weekly chain store sales were up by 2.9% in the latest week compared with a year earlier, up from the 2.3% annualised gain in the previous week.

The International Monetary Fund is tipping the world economy to grow by 3.6% this year, down from the 3.7% earlier estimate. The US is expected to grow by 2.8% with China up 7.5% and Australia to grow by 2.6%.

European shares eased on Tuesday. The FTSEurofirst 300 index fell by 0.2% with the UK FTSE down by 0.5%, while the German Dax lost 0.2%. Investors took profits on the best-performing indexes with the Italian market down 1.5%. But mining shares were higher in London trade with shares in BHP Billiton up by 0.6% while Rio Tinto lifted by 2.5%.

US sharemarkets rose on Tuesday with technology stocks rebounding in response to bargain-hunting. The Dow Jones index rose by 10 points or 0.1% with the S&P 500 up 0.4%, while the Nasdaq lifted by 33 points or 0.8%.

US treasury prices were firmer again on Tuesday (yields lower) after strong buying by direct bidders like central banks and large fund managers in a $30 billion auction of three-year notes. US Treasury will also sell $21 billion of 10-year notes on Wednesday and sell $13 billion of 30-year bonds on Thursday. US 2 year yields fell by 2 points to 0.399% while US 10 year yields were down by 2 points to 2.679%.

Major currencies rose against the greenback over the European and US sessions on Tuesday. The Euro lifted from lows around US$1.3735 to near US$1.3810, before ending US trade around US$1.3795. The Aussie dollar rose from lows near US92.85c to high near US93.65c before finishing US trade around US93.55c. And the Japanese yen strengthened from 103.00 yen per US dollar to JPY101.55 and was near JPY101.70 at the US close.

World oil prices posted solid gains on Tuesday in response to a weaker US dollar. A weaker US dollar improves the purchasing power for commodity buyers in Europe and Asia. On-going tensions between the US and Russia further supported oil prices. Brent crude rose by US$1.85 or 1.7% to US$107.67 a barrel while US Nymex rose by US$2.12 or 2.1% to US$102.56 a barrel.

Base metal prices were generally firmer by up to 1.2% on the London Metal Exchange on Tuesday with zinc leading the way. But tin bucked the trend, down by 0.1%. The gold price rose on Tuesday in response to a weaker greenback with the Comex futures quote up by US$10.80 an ounce to US$1,309.10 per ounce. Iron ore rose by US$1.00 to US$118.20 a tonne on Tuesday.

Ahead: In Australia consumer sentiment and housing finance data are scheduled. In the US, wholesale sales and weekly mortgage finance data are released. The Federal Reserve will release minutes of the last poilicy-setting meeting.
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