Australian Stock Market Report – Morning July 1, 2014

Specialist trader Geoffrey Friedman monitors his screen as a television displays the Federal Reserve decision, on the floor of the New York Stock Exchange June 18, 2014. The U.S. Federal Reserve on Wednesday hinted at a slightly faster pace of interest rate increases starting next year, but suggested benchmark borrowing costs in the long-run would be lower than it had indicated previously. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)

Morning Report
(6:15 AEST)

US San Francisco Fed President Williams (non-voter) spoke overnight and reiterated that he does not expect the Fed to raise interest rates ´´for some time´´. Although he did not specify what time period he had in mind, he has previously said that he expects a move in the second half of 2015.

In US economic data, pending home sales increase by 6.1% in May to an eight month high. The ISM Chicago business barometer fell from 65.5 to 62.6 in May, mildly below expectations.

European shares were mixed on Monday, with traders squaring positions ahead of the end of the June quarter. Travel stocks were weaker after a broker downgrade for easyJet (down 6.4%). The European travel and leisure index lost 0.6%. The European banking index lost 0.7%. The FTSEurofirst 300 index was largely flat, the German Dax gained 0.2% while the UK FTSE lost 0.2%. Australia´s major miners finished were weaker in London trade with shares in BHP Billiton down by 1.3% while Rio Tinto fell by 0.5%.

US sharemarkets barely moved on Monday following the mixed economic data. Homebuilders benefited from the lift in pending home sales with Lennar lifting by 0.9%. General Motors lost 1.7% after announcing six more safety recalls. Ending the quarter utilities was the best performing sector while retail was amongst the weakest. The Dow Jones fell by 25 points with the S&P 500 index was flat and the Nasdaq rose by 10 points or 0.2%. For the June quarter the Dow Jones rose by 2.2%, while the S&P 500 lifted 4.7% and the Nasdaq added 5% - marking the sixth straight quarter of gains.

US treasury prices rose modestly on Monday (yields lower), although traders were reluctant to make sizeable bets ahead of the quarter-end and jobs data on Thursday. US 2 year yields fell by 2 points to 0.46% while US 10 year yields fell by 1 point at 2.53%.

Major currencies were stronger against the US dollar on Monday. The Euro lifted from lows near U$1.3640 to highs near US$1.3695, closing US trade near its highs. The Aussie dollar lifted from lows near US93.85c and US94.40c and ended US trade near US94.30c. And the Japanese yen traded in a tight range between 101.40 yen per US dollar to JPY101.25, ending US trade near JPY101.30.

World oil prices eased on Monday as concerns about potential supply disruptions from Iraq eased. Brent crude fell by US85c or 0.8% to US$112.45 a barrel. While the US Nymex price closed lower by US37c or 0.3% to US$105.37 a barrel.

Base metal prices were higher on the London Metal Exchange on Monday. Zinc led the gains up by 1.3% while tin lifted by 1.1%. The Comex gold futures quote rose by US$2 an ounce or 0.2% to US$1,322 per ounce. Iron ore fell by US$1.10 a tonne or 1.2% to US$93.80 a tonne.

Ahead: In Australia, the RPData house price index is released. The Reserve Bank board meeting takes place. In the US, ISM manufacturing index and construction spending are released.

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