Australian Stock Market Report – Morning August 11, 2014

A worker weighs a collection of field coagula near a plantation at Bukit Chandang in the district of Batangkali, outside Kuala Lumpur May 26, 2014. A slump in natural rubber prices to multi-year lows is spurring Southeast Asian farmers to turn to other crops and tappers to look for other jobs, potentially chipping away at a chronic supply overhang. Any crop shift won't lead to a rapid drop in output, say analysts, but along with threats of an El Nino weather pattern could start to halt production growth as tumbling prices take a toll on the region's five million-plus rubber farmers. Picture taken May 26, 2014. Reuters/Samsul Said

* In US economic data, labour costs rose at a 0.6% annual rate in the June quarter while productivity rose by 2.5%. Economists had tipped a 1.4% lift in labour costs and 1.5% rise in productivity. Wholesale inventories rose by 0.3% in June with sales up 0.2%, both short of forecasts.

* In Chinese economic data, producer prices fell 0.9% over the year to July while consumer prices rose by 2.3%, both as expected.

* European shares fell to 4-month lows on Friday with investors fearful of the consequences of US military strikes into Iraq. The FTSEurofirst 300 index fell by 1.2% with the German Dax down by 0.3% while the UK FTSE lost 0.5%. But Australia's major miners were higher in London trade with shares in BHP Billiton up by 0.7% while Rio Tinto rose by 0.2%.

* US sharemarkets rebounded sharply on Friday after Russia said it concluded military exercises near the Ukrainian border. The Dow Jones index rose by 185 points or 1.1% with the S&P 500 index up by 1.2% while the Nasdaq rose by 36 points or 0.8%. Over the week the Dow rose by 0.4% while the S&P 500 rose by 0.3% and the Nasdaq gained 0.4%.

* US treasury prices steadied on Friday. US 2 year yields were flat

at 0.448% while US 10 year yields were up by 1 point to 2.422%.

Over the week US 2 year yields fell by almost 2 points while US 10

year yields fell by 6 points.

* The Euro and commodity currencies were firmer against the US dollar following news of the end to Russian military exercises. The Euro rose from lows near US$1.3355 to around US$1.3430, before ending US trade near US$1.3410. The Aussie dollar lifted from lows near US92.40c to highs near US92.85c before ending the US session close to US92.75c. But the Japanese yen eased from 101.50 yen per US dollar to JPY102.08, ending US trade near JPY102.04.

* World oil prices were mixed on Friday. Brent fell on the view that US military strikes in Iraq could reduce the prospect of disruptions to oil supplies. But Nymex crude rose as the sharemarket rebounded and the US dollar fell. Brent crude fell by US42c or 0.4% to US$105.02 a barrel but the US Nymex price rose by US31 cents a barrel to US$97.65 a barrel. Over the week Brent rose by US18c a barrel while US Nymex lost US23c.

* Base metal prices fell by up to 1.8% on Friday with nickel down the most. But tin was flat and aluminium rose by 0.1%. Over the week, base metal prices were mixed with aluminium up 2.9% with zinc down by 2.3%. Gold prices fell slightly on Friday with the Comex gold futures quote own by US$1.50 or 0.1% to US$1,311.00 per ounce. Over the week gold rose by US$16.50 an ounce. Iron ore fell by US30C on Friday or 0.3% to US$95.70 a tonne. But over the week iron ore rose by US50c.

Ahead: In Australia, lending finance data is released. In the US, no major economic data is scheduled.

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