Australian Stock Market Report – Morning 5/28/14

MORNING REPORT
(6.05am AEST)

In US economic data, the 20-city S&P/Case-Shiller Home Price Index lifted by a larger than expected 1.2% in March and was up 12.4% on a year ago. The Conference Board Consumer Confidence index rose by 1.3 points to 83.0 in May. The regional manufacturing indices were mixed, with the Dallas Fed index retreating from +11.7 to +8.0 in May, while the Richmond Fed index remained at +7 in May. US durable goods orders rose by 0.8% in April after an upwardly revised 3.6% in March.

European shares rose to fresh multi-year highs on Tuesday, supported by expectations of further easing measures at the upcoming ECB meeting. Merger & acquisition talk also supported buying after media reports that Intercontinental Hotel Group (+3.4%) had received interest from an unidentified US bidder. The European FTSEurofirst 300 index rose by 0.2%, while the German Dax rose by 0.5% and the UK FTSE lifted by 0.4%. Mining shares were mixed in London trade with shares in BHP Billiton flat while Rio Tinto fell by 0.7%.

US sharemarkets rose to fresh record highs on Tuesday supported by upbeat economic data. The Russel 2000 small cap index was one of the best performers up around 1.4%. The Dow Jones index rose by 69 points or 0.4% with the S&P 500 up by 0.6% while the Nasdaq rose by 51 points or 1.2%.

US long-term treasury prices rose on Tuesday (yields lower) with traders remaining cautious despite the generally upbeat US economic data. US 2 year yields fell by 1 point to 0.35% while US 10 year yields were down by 2 points to 2.52%.

Major currencies eased against the US dollar over European and US sessions. The Euro fell from highs near US$1.3660 to lows near US$1.3615, before ending US trade around US$1.3635. The Aussie dollar fell from highs near US92.75c to lows near US92.30c before finishing US trade around US92.55c. And the Japanese yen held between 101.75 yen per US dollar and JPY102.10, before ending US trade near JPY101.95.

World oil prices fell on Tuesday as traders lock in profits after a long weekend. Analyst reports suggested that there would be less supply disruption to Russian energy supplies after Ukraine elected a new President. Brent crude fell by US28c or 0.3% to US$110.04 a barrel while US Nymex fell by US24c or 0.2% to US$104.11 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday. Aluminium was the best performer up 0.7%, while lead lost 0.4%. The Comex gold futures quote fell to a 3½-month low on Tuesday, down by US$26.20 an ounce to US$1,265.50 per ounce. Iron ore fell by US50c a tonne on Tuesday to US$98.10 a tonne.

Ahead: In Australia, construction work figures for the March quarter are released. In the US, no economic data is released.

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