Australian Stock Market Report – Morning 5/26/14

MORNING REPORT
(5.15am AEST)

In US economic data, new home sales rose by 6.4% to a 433,000 annual pace in April, above forecasts centred on result near 425,000. The weekly Economic Cycle Research Institute index eased from 136.3 to 135.1 in the latest week but is up 5.0% on a year ago.

European shares were generally higher on Friday despite some caution ahead of European Union elections and the Ukraine presidential election. The Italian market outperformed, up 1.8% in response to lower bond yields. But the UK market underperformed with the FTSE lower by 0.1%. The European FTSEurofirst 300 index rose by 0.2% and the German Dax rose by 0.5%. Mining shares were higher in London trade with shares in BHP Billiton up by 0.6% while Rio Tinto fell by 0.9%.

US sharemarkets rose on Friday with the broader S&P 500 index at record highs. Shares in Hewlett Packard rose by 6.1% after announcing that it will cut as many as 16,000 jobs. Other technology shares shone with Apple up 1.1% and Amazon shares up 2.4%. The Dow Jones index rose by 63 points or 0.4% with the S&P 500 up by 0.4% while the Nasdaq rose by 31.5 points or 0.8%. Over the week the Dow rose by 0.7%, the S&P 500 lifted by 1.2% and the Nasdaq rose by 2.3%.

US long-term treasury prices rose on Friday (yields lower) on uncertainty ahead of elections in Europe. However gains were tempered by good US economic data. US 2 year yields were flat at 0.347% while US 10 year yields were down by 2 points to 2.536%. Over the week US 2 year yields rose by almost 1 point and US 10 year yields fell by 1.5 points.

Major currencies held in tight ranges over European and US sessions ahead of holiday weekends in the US and the UK. The Euro fell from highs near US$1.3650 to lows near US$1.3615, before ending US trade around US$1.3635. The Aussie dollar fell from highs near US92.45c to lows near US92.15c before finishing US trade around US92.25c. And the Japanese yen held between 101.58 yen per US dollar and JPY101.99, before ending US trade near JPY101.96.

World oil prices rose on Friday. Traders watched developments in Libya and Ukraine, and remained positive about US and Chinese economies. Brent crude rose by US18c or 0.2% to US$110.54 a barrel while US Nymex rose by US61c or 0.6% to US$104.35 a barrel. Over the week Brent rose by US79c or 0.7% and Nymex rose by US$2.33 or 2.3%.

Base metal prices were up between 0.3-1.1% on the London Metal Exchange on Friday, the exception being nickel, down 0.5%. Over the week, metals rose up to 3.2% with nickel leading the gains. The Comex gold futures quote fell by US$3.30 an ounce on Friday to US$1,291.70 per ounce. Over the week gold fell by US$1.70 or 0.1%. Palladium fell 0.7% from 2-1/2 year highs. Iron ore fell by US$1.30 a tonne on Friday to US$97.50 a tonne. Iron ore fell US$3.20 over the week.

Ahead: In Australia, ´´Spotlight on National Accounts´´ is released. In the US, markets are closed for the Memorial Day holiday. The UK market is closed for the Spring Bank holiday.

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