Australian Stock Market Report – Morning 5/9/14

MORNING REPORT
(6.05am AEST)

In US economic data, jobless claims fell by a larger than expected 26,000 to a seasonally adjusted 319,000 last week.

In testimony to the Senate, Federal Reserve Chair Janet Yellen repeated her dovish comments made to Congress yesterday. She did add that no decision had yet been made on the central bank´s portfolio of assets, which had grown from $800 billion in 2007 to $4.5 trillion. And if the Fed did decided to shrink it to a pre-GFC size it could take the better part of a decade.

European shares lifted to near six year highs on Thursday after the European Central Bank opened the door to more stimulus measures. The ECB kept rates on hold on Thursday but ECB President Draghi said it ´´was comfortable´´ with the idea of acting in June after receiving updated growth and inflation forecasts. Draghi stressed that the strength in the Euro was ´´a serious concern´´. The FTSEurofirst 300 index lifted by 1.1%. The German Dax lifted by 0.9% and the UK FTSE rose by 0.6%. And mining shares fell in London trade with shares in BHP Billiton down 0.2% and Rio Tinto down by 1.3%.

US sharemarkets erased earlier gains, led by losses in the energy and utility sectors. Tesla Motors fell by 11%, a day after the company´s outlook for the second quarter disappointed investors. The Dow Jones rose by 32 points or 0.2% with the S&P 500 closing down by 0.1% and the Nasdaq lost 16 points or 0.4%.

US short-term treasury prices rose on Thursday(yields lower) as traders continued to digest Fed Chair Yellen´s dovish comments. US 2 year yields fell by 3pts to 0.39% while US 10 year yields rose by 2pts to 2.61%.

The US dollar rallied against the Euro on Thursday after ECB president Draghi hinted at further stimulatory measures. The Euro fell from highs near US$1.3990 to lows near US$1.3830, ending US trade around its lows. The Aussie dollar fell from around US93.95c to near US93.65c before finishing US trade around US93.70c. And the Japanese yen strengthened from 101.85 yen per US dollar to almost JPY101.45 before ending US trade near JPY101.60.

World oil prices fell mildly on Thursday after the sharp rise in the prior session. Brent crude fell by US9c or 0.1% to US$108.04 a barrel while US Nymex fell by US51c to US$100.26 a barrel.

Base metal prices were stronger on the London Metal Exchange on Thursday with nickel recording the biggest gains (up 4.1%). The Comex gold futures quote fell, down by US$1.20 an ounce to US$1287.70 per ounce. Iron ore fell by US$1.40 a tonne or 1.4% to US$103.70 a tonne.

Ahead: In Australia the Reserve Bank release the Statement on Monetary policy. In the US, wholesale inventories are expected. China releases inflation figures.

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