Australian Stock Market Report – Morning 5/29/13

MORNING REPORT
(6.45am AEST)

In US economic news the S&P Case/Shiller home price 20-index posted a 1.1pct gain in March taking annual growth up to 10.9pct, back at a double-digit pace for the first time since 2006.

The Conference Board consumer confidence reading jumped from 69.0 to 76.2 in May. This was a high since 2008 and continues the run of encouraging economic data in recent months.

European shares ended higher on Tuesday as pledges of continued central bank stimulus calmed investors. Construction and technology stocks led the gains. The FTSEurofirst 300 index closed 1.3pct higher with the German Dax up 1.2pct while the UK FTSE rose by 1.6pct. Mining shares were higher in London trade. Shares in BHP Billiton were up by 0.8pct while Rio Tinto rose by 0.5pct.

US sharemarkets rallied on Tuesday on the upbeat US economic data. In the last 24 hours the Bank of Japan and the European Central Bank reaffirmed that their accommodative policies would remain in place, supporting investor sentiment. Cyclical stocks drove the gains. The KBW banking index advanced 1.4pct. The Dow Jones closed up 106pts or 0.7pct. The S&P 500 rose by 0.6pct while the Nasdaq rose by 30pts or 0.9pct.

US treasuries fell on Tuesday (yields higher) as a lacklustre $35 billion auction of two-year notes underscored expectations that the US Federal Reserve could soon taper its bond buying program. US 2yr yields were higher by 3pts to 0.29pct and US 10yr yields rose by 16pts to 2.17pct - a one-year high.

The US dollar traded higher on Tuesday after robust economic data reinforced expectations that the Federal Reserve may start unwinding its stimulus program over the next few months. The Euro fell from highs near US$1.2945 to US$1.2855 before ending US trade near US$1.2860. The Aussie dollar fell from highs near US96.95c to lows near US96.20c and ended US trade near its lows. And the Japanese yen traded between 101.85 yen per US dollar to JPY102.50, before ending US trade at JPY102.30.

World crude oil prices rose on Tuesday, as US consumer optimism and signs of ongoing central bank stimulus supported the bid for oil. Brent crude rose by US$1.61 or 1.6pct to US$104.23 and US Nymex crude rose by US86c or 0.9pct to US$95.02 a barrel.

Base metal prices were higher by as much as 2.4pct in London trade on Tuesday with lead leading the way. The gold price fell in a choppy trading session on Tuesday as the rally in equities and stronger US dollar reduced the demand for gold. The Comex June futures price fell by US$7.80 or 0.6pct to US$1,379.70 per ounce. The iron ore price fell by US$3.10 or 2.6pct to US$117.80 a tonne - the lowest levels since mid-December.

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

[Kick off your trading day with our newsletter]