Australian Stock Market Report – Morning 5/27/14

MORNING REPORT
(5.45am AEST)

European shares rose on Monday following uneventful European Union elections and a decisive result in presidential elections in Ukraine. Reuters reports ´´Results from around the 28-nation bloc showed pro-European centre-left and centre-right parties will keep control of around 70 percent of the 751-seat EU legislature, but the number of Eurosceptic members will more than double.´´ In Ukraine, Petro Poroshenko, a billionaire chocolate manufacturer, record an emphatic victory in presidential elections.

The Italian sharemarket outperformed other European bourses on Monday, gaining 3.6%, after a solid performance by Prime Minister Matteo Renzi´s centre-left Democratic Party in European elections. The broader European FTSEurofirst 300 index rose by 0.5% and the German Dax rose by 1.3% to record highs.

US sharemarkets were closed for the Memorial Day holiday. On Friday the Dow Jones index rose by 63 points or 0.4% with the S&P 500 up by 0.4% to record highs 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%.

The US treasury bond market was closed for the Memorial Day holiday. On Friday 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 north American sessions. The Euro rose from lows near US$1.3620 to highs near US$1.3655, before ending north American trade around US$1.3645. The Aussie dollar held between US92.33c and US92.48c before finishing trade around US92.42c. And the Japanese yen held between 101.82 yen per US dollar and JPY101.97, before ending trade near JPY101.90.

World oil prices were modestly lower in quiet trade on Monday following uneventful European elections. Brent crude fell by US15c or 0.1% to US$110.39 a barrel while US Nymex fell by US17c or 0.2% to US$104.18 a barrel.

The London base metal market was closed for the Spring Bank holiday. On Friday base metal prices were up between 0.3-1.1% on the London Metal Exchange, the exception being nickel, down 0.5%. Over the week, metals rose up to 3.2% with nickel leading the gains. The spot gold quote was up by around US70c an ounce on Monday to US$1,292.40 per ounce. Iron ore rose by US$1.10 a tonne or 1.1% on Monday to US$98.60 a tonne.

Ahead: In Australia, ALS Group and OZForex release full-year results while OZMinerals holds its annual general meeting. In the US, durable goods orders, the CaseShiller home price index, FHFA home price index, consumer confidence, the Markit ´´flash´´ services index and Richmond Federal Reserve index are all released.

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