Australian Stock Market Report – Morning 5/6/14

MORNING REPORT
(6.00am AEST)

In US economic data, the ISM services index rose from 53.1 to an 8-month high of 55.2 in April, and above forecasts for a result near 54.1. The employment trends report rose from 117.5 to 118.0 in April.

European shares eased on Monday but recovered from lows in late trade in response to an upbeat reading on the US services sector. But trading volumes were down 30% on the average for the past three months. The FTSEurofirst 300 index eased by 0.3% while the German Dax also lost 0.3%. The UK market was closed for the May Bank Holiday.

US sharemarkets rose modestly on Monday, supported by a positive reading on the services sector. But it had been a different situation at the start of trade with share prices down in response to violence in Ukraine. Shares in Pfizer lost 2.6% after the nation´s largest drugmaker reported revenues below expectations. After being down 135 points in early trade, the Dow Jones index ended higher by 17 points or 0.1% with the S&P 500 up 0.2% and the Nasdaq was up by 14 points or 0.3%.

US long-term treasury prices fell on Monday (yields higher). in response to an upbeat reading on the US services sector. But traders were cautious ahead of testimony by the US Federal Reserve chief on Wednesday and Thursday. US 2 year yields fell by 1 point to 0.422% while US 10 year yields rose by 2 points to 2.61%.

Major currencies held in generally tight ranges against the US dollar on Monday in European and US trade. The Euro held between US$1.3865 and US$1.3885, before ending US trade around US$1.3875. The Aussie dollar held between US92.55c and US92.85c before finishing US trade around US92.70c. And the Japanese yen eased from 101.87 yen per US dollar to JPY102.14 before ending US trade near JPY102.12.

World oil prices fell on Monday in response to news of higher oil output from Libya as well as data showing on-going softness in the Chinese manufacturing sector. However traders continued to watch developments in Ukraine. Brent crude fell by US87c or 0.8% to US$107.72 a barrel while US Nymex fell by US28c or 0.3% to US$99.28 a barrel.

There was no trade on the London Metal Exchange on Monday due to a market holiday. On Friday base metal prices rose up to 1.2% with copper rising the most. Nickel bucked the trend, easing by 0.1%. The Comex gold futures quote rose by US$6.40 an ounce to a 3-week high of US$1,309.30 per ounce with prices supported by on-going violence in Ukraine. Iron ore fell by US10c a tonne or 0.1% to US$105.90 a tonne.

Ahead: In Australia the Reserve Bank Board meets and international trade data is released. The Victorian Budget is handed down. In the US, weekly chain store sales data is expected.

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