Australian Stock Market Report – Morning 5/23/14

MORNING REPORT
(6.05am AEST)

In US economic news initial jobless claims rose 28,000 to 326,000 last week. US existing home sales rose by 1.3% in April to 4.65 million annual units. The increase marked only the second gains in nine months. Sales remain 6.8% lower than a year ago. The US Markit ´´flash´´ manufacturing index rose from 55.4 to 56.2 in April.

European shares were mixed on Thursday, as concerns over upcoming European Parliament elections weighed on regional indices. The elections could undermine some Euro Zone governments. Italy´s FTSE MIB lost 1.1%, while Spain´s IBEX fell 0.1%. The FTSEurofirst 300 index rose by 0.1% while the German Dax gained 0.2%, and the UK FTSE was flat. Mining shares were higher with shares in BHP Billiton up 1% while Rio Tinto rose by 1.3%.

US sharemarkets recoded modest gains on Thursday, led by a rally in small-cap and biotech´s stocks. Housing stocks also were amongst the better performers following the rebound in existing home sales. The housing index lifted 1.2% with luxury home builder D.R Horton up 2.4%. Discount retailer Dollar Tree jumped 6%, and was the best performer on the S&P500, after posting upbeat first quarter results. The small-cap Russel 2000 index lifted 0.9%. Shares in JD.com - a Chinese online retailer that handled more than $20 billion of purchases on its website last year - raised $1.78 billion in an IPO and jumped 8%. The Dow Jones index rose by 10 points or 0.1% with the S&P 500 up by 0.2% while the Nasdaq rose 23 points or 0.6%.

US long-term treasury prices edged lower on Thursday (yields higher) after positive US home sales and factory activity lifted sentiment. US 2 year yields fell 1pt at 0.35% while US 10 year yields were up by 1 points to 2.55%.

Major currencies were weaker against the US dollar on Thursday over the European and US sessions. The Euro fell from highs near US$1.3685 to lows near US$1.3640, before ending US trade around US$1.3655. The Aussie dollar fell from highs near US92.60c to lows near US92.10c, ending US trade near US92.20c. And the Japanese yen held between 101.50 yen per US dollar and JPY101.80, before ending US trade near JPY101.70.

World oil prices edged lower on Thursday with traders locking in profits after Brent touched a near three month high. Brent crude fell by US19c or 0.2% to US$111.04 a barrel while US Nymex fell by US33c or 0.3% to US$103.74 a barrel.

Base metal prices were higher on the London Metal Exchange on Thursday following the better than expected ´´flash´´ Chinese manufacturing gauge. Aluminium was the best performer up 1.8% while Nickel and Copper both lifted by 1.1%. Other metals rose between 0.6%-0.9%. The Comex gold futures quote rose US$6.90 an ounce on Thursday to US$1,295.00 per ounce. Iron ore rose by US30c a tonne on Thursday to US$98.80 a tonne.

Ahead: In Australia no economic data is released. Newcrest releases quarterly results. In the US, no data is expected.

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