Australian Stock Market Report – Morning 5/5/14

MORNING REPORT
(5.15am AEST)

In US economic data, non-farm payrolls (employment) rose by 288,000 in April, the best gain since January 2012 and well above forecasts for a gain of 210,000. The unemployment rate fell from 6.7% to a 5-1/2 year low of 6.3%. But less people looked for work with the participation rate falling from 63.2% to 62.8%. Factory orders rose by 1.1% in March.

China´s purchasing managers index for the services sector rose from 54.5 to 54.8 in April.

European shares were mixed on Friday as investors monitored violence in Ukraine and merger and acquisition news. The FTSEurofirst 300 index eased by 0.3% and the German Dax lost 0.5% but the UK FTSE rose by 0.2%. Mining shares posted solid gains in London trade with shares in BHP Billiton up by 1.8% while shares in Rio Tinto lifted by 1.5%.

US sharemarkets eased on Friday on worries about the geopolitical situation in eastern Europe. But the jobs data provided support. The Dow Jones index fell by 46 points or 0.3% with the S&P 500 and Nasdaq both down by 0.1%. Over the week the Dow Jones and S&P 500 both rose by 0.9% with the Nasdaq up 1.2%.

US long-term treasury prices rose on Friday (yields lower). While jobs data beat expectations, investors gravitated to bonds rather than equities on continued violence in Ukraine. US 2 year yields rose by 1 point to 0.42% while US 10 year yields fell by 3 points to 2.58%. Over the week, US 2 year yields fell by 1.6 points and US 10 year yields fell by 12 points.

Major currencies recovered from session lows against the US dollar in European and US trade on Friday. The Euro fell from near US$1.3870 to lows near US$1.3810, before ending US trade around US$1.3870. The Aussie dollar fell from near US92.75c to lows around US92.00c before finishing US trade around US92.75c. And the Japanese yen eased from 102.38 yen per US dollar to JPY102.98 before ending US trade near JPY102.18. The Aussie is near US93.10c this morning.

World oil prices rose on Friday in response to increased violence in Ukraine and a strong US jobs report. Brent crude rose by US83c or 0.8% to US$108.59 a barrel while US Nymex rose by US34c or 0.3% to US$99.76 a barrel. Over the week Brent fell by US99c or 0.9% with Nymex down US84c or 0.8%.

Base metal prices rose by up to 1.2% on the London Metal Exchange on Friday with copper rising the most. Nickel bucked the trend, easing by 0.1%. Over the week metal prices fell between 0.4% and 4.0% with aluminium falling most. The Comex gold futures quote rose by US$18.80 an ounce to US$1,302.20 per ounce - the biggest rise in two months. Over the week gold rose by just US$1.40 an ounce. Iron ore rose by US60c a tonne or 0.6% to US$106.00 a tonne. Over the week iron ore fell by US$5.00 a tonne.

Ahead: In Australia the TD Securities inflation gauge is released with building approvals, job advertisements and the Performance of Services index. In the US, the ISM services index is released with the employment trends report.

[Kick off your trading day with our newsletter]