Australian Stock Market Report – Morning 5/12/14

MORNING REPORT
(6.05am AEST)

In US economic data, wholesale sales rose by 1.1% in March with inventories up 1.4%. Economists had tipped a 0.5% lift in sales and 0.8% rise in inventories.

European shares retreated from 6-year highs on Friday in response to poor corporate earnings results and profit-taking. The FTSEurofirst 300 index fell by 0.4% with the German Dax down by 0.3% and the UK FTSE fell by 0.4%. And mining shares also fell in London trade with shares in BHP Billiton down by 0.9% while Rio Tinto eased by 0.5%.

Chinese Premier Li Keqiang has expressed concern about the country´s record $3.95 trillion foreign exchange reserves, saying that they ´´have become a big burden for us, because such reserves translate into the base money, which could affect inflation.´´

US sharemarkets rose on Friday with the Dow Jones index closing at a record high. Investors were encouraged by corporate earnings results while momentum stocks were also back in favour. Shares in Apple fell by 0.4% on news that it is close to paying a record $3.2 billion for Beats, a music streaming and headphone retailer. The Dow Jones index rose by 32 points to 16,583 points while the S&P 500 was up by 0.2% and the Nasdaq lifted by 20 points or 0.5%. Over the week the Dow rose 0.4% with the S&P 500 down 0.1% while the Nasdaq fell by 1.3%.

US long-term treasury prices were little changed on Friday. US sharemarkets rose only modestly, there was no pivotal economic data to drive trading and investors continued to watch developments in Ukraine. US 2 year yields fell by 1 point to 0.387% while US 10 year yields were flat at 2.62%. Over the week US 2 year yields fell 4 points while US 10 year yields rose by 2 points.

Major currencies were generally weaker against the US dollar on Friday. The Euro fell from highs near US$1.3845 to lows near US$1.3745, before ending US trade around US$1.3755. The Aussie dollar fell from highs near US93.75c to US93.45c before finishing US trade around US93.60c. And the Japanese yen eased from 101.61 yen per US dollar to JPY101.85, ending US trade near the weakest levels of the session.

World oil prices fell on Friday although they traded in tight ranges. A firmer greenback weighed on commodity prices. Traders continue to watch developments in Ukraine. Brent crude fell by US15c or 0.1% to US$107.89 a barrel while US Nymex fell by US27c or 0.3% to US$99.99 a barrel. Over the week Brent fell by US70c or 0.6% but Nymex rose by US23c or 0.2%.

Base metal prices were mixed on the London Metal Exchange on Friday. Nickel rose 2.5% while other metals rose or fell by less than 0.4%. Over the week nickel rose by 8.9% with copper and tin up 0.6% but other metals fell up to 1.4%. The Comex gold futures quote fell by just US10c an ounce to US$1,287.60 per ounce. Over the week gold fell by US$14.60 or 1.1%. Iron ore fell by US$1.00 a tonne or 1.0% to US$102.70 a tonne. Over the week iron ore fell by US$3.30 an ounce or 3.2%.

Ahead: In Australia the NAB business survey is released. In the US, the monthly Federal Budget figures are released.

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