Australian Stock Market Report – Morning 5/29/14

MORNING REPORT
(6.05am AEST)

In US economic data, the weekly mortgage market index fell by 1.2% with the purchase index down 1.1% and the refinance index down 1.8%. According to Redbook Research, weekly chain store sales fell rose by 3.2% on a year ago, down from the 3.9% annual gain in the previous week. The Dallas Federal Reserve services index eased from +18.5 to +13.1 in May.

European shares were generally flat on Wednesday. Germany posted the biggest lift in unemployment in over five years, supporting speculation that the European Central Bank will ease monetary policy next week. The FTSEurofirst 300 index eased by 0.1%, while the German Dax was down by less than 0.1% and the UK FTSE rose by 0.1%. The Portuguese market rose 1.1% with Italy up 0.9%. But mining shares were lower in London trade with shares in BHP Billiton down by 1.3% while Rio Tinto lost 1.8%.

US sharemarkets ended slightly lower on Wednesday. The Dow Jones index fell by 42 points or 0.3% with the S&P 500 down 0.1% after hitting an intra-day all-time high in the session. And the Nasdaq lost 12 points or 0.3%. Shares of luxury homebuilder, Toll Brothers, rose by 2.1% after reporting a doubling in quarterly profit.

US long-term treasury prices rose again on Wednesday with yields, which move inversely to prices, down to 11-month lows. German bond yields fell following weak economic data and the impact spilled over into other bond markets across the globe. US 2 year yields rose by 2 points to 0.37% while US 10 year yields were down by 8 points to 2.44%.

Major currencies eased against the US dollar over European and US sessions. The Euro fell from highs near US$1.3635 to lows near US$1.3585, before ending US trade around US$1.3595. The Aussie dollar fell from highs near US92.65c to lows near US92.10c before finishing US trade around US92.30c. And the Japanese yen eased from 101.97 yen per US dollar to JPY101.66, before ending US trade near JPY101.85.

World oil prices fell on Wednesday with traders expecting data to reveal a rise in US crude oil inventories in the latest week. The US Nymex price fell most with Brent supported by geopolitical concerns about Libya and Ukraine. Brent crude fell by US21c or 0.2% to US$109.81 a barrel while US Nymex fell by US$1.39 or 1.3% to US$102.72 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday, but gains or losses were less than 1.3%. Nickel fell 1.3% while aluminium rose by 0.7%. The Comex gold futures quote fell to fresh 3½-month lows on Wednesday, down by US$6.00 an ounce to US$1,259.70 per ounce. Iron ore fell by US$1.30 a tonne or 1.3% on Wednesday to US$96.80 a tonne.

Ahead: In Australia, private capital expenditure (business investment) figures are due. In the US, weekly jobless claims data is released together with economic growth data and pending home sales figures.

[Kick off your trading day with our newsletter]