Australian Stock Market Report – Morning 5/14/14

MORNING REPORT
(6.05am AEST)

In US economic data, retail sales rose by 0.1% in April, short of forecasts tipping a 0.4% gain. But March data was revised higher. Excluding autos, sales were flat, down on forecasts tipping a 0.6% gain. Import prices fell 0.4% in April with export prices down 1.0%. Both results were softer than expected

European shares rose again on Tuesday with a number of bourses at multi-year highs. Better-than-expected corporate news offset some soft economic data in the US, Germany and China. Shares in Airbus rose 6.2% after reporting solid earnings results. The FTSEurofirst 300 index rose by 0.3% to 6-year highs with the German Dax up by 0.5% and the UK FTSE rose by 0.3%. And mining shares were mixed after solid gains the previous day. Shares in BHP Billiton were up by 1.0% while Rio Tinto fell by 0.3%.

US sharemarkets were little-changed on Tuesday as investors digested latest corporate news and weaker-than-expected economic data. Shares in homebuilder stocks rose on reports that new policies could make it easier for people to obtain home loans. The Dow Jones index rose by 20 points or 0.1% to record highs. The S&P 500 was up by less than 0.1% to record levels and broke through 1,900 points during the session for the first time. The Nasdaq eased by almost 14 points or 0.3%.

US long-term treasury prices rose on Tuesday (yields lower) in response to weaker-than expected economic data. US 2 year yields fell by 3 points to 0.38% while US 10 year yields were down by 6 points to 2.61%.

Major currencies were mixed against the US dollar on Tuesday over the European and US sessions. The Euro fell from highs near US$1.3770 to lows near US$1.3690, before ending US trade around US$1.3700. The Aussie dollar rose from lows near US93.30c to highs near US93.80c before finishing US trade around US93.55c. And the Japanese yen held between 102.04 yen per US dollar and JPY102.35, before ending US trade near JPY102.27.

World oil prices rose on Tuesday on expectations that weekly US data will show another fall in crude stocks. Brent crude rose by US83c or 0.8% to US$109.24 a barrel while US Nymex rose by US$1.11 or 1.1% to US$101.70 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday. Tin rose 1.4% while nickel rose 0.3% but other metals lost up to 0.7%. The Comex gold futures quote rose for the second day, up US30c an ounce to US$1,296.10 per ounce. But both platinum and palladium prices rose by 1.5% on supply fears. Iron ore was unchanged at US$103.00 a tonne

Ahead: In Australia Commonwealth Bank releases a trading update. CSR releases annual results. No major economic data is scheduled. In the US, data on producer prices are released together with weekly mortgage finance figures.

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