Australian Stock Market Report – Morning July 10, 2014

Morning Report
(06:10 AEST)

The US Federal Reserve FOMC minutes from its June 17-18 meeting were released. The Fed began detailing how it plans to ease the US economy out of an era of loose monetary policy. The minutes showed that Fed participants ´´generally agreed´´ that its monthly bond purchases would end in October. There was also discussion about the central banks current policy of reinvesting its $4.2 trillion in asset holdings as the securities mature. Policymakers debated how to reduce those holdings without disrupting financial markets. Rates hikes are still unlikely till the second half of 2015.

European shares were mostly weaker on Wednesday. Portuguese shares were the key underperformer after being by hit by concerns about the health of one of the largest financial groups. Portuguese largest Bank Banco Espirito Santo fell by 4.7% after financial trouble at its largest at its largest shareholder. Lisbon´s PSI 20 fell 2.1%. The FTSEurofirst 300 index closed flat, the German Dax rose 0.4% while the UK FTSE fell by 0.3%. Australia´s major miners finished higher in London trade with shares in BHP Billiton up by 0.2% while Rio Tinto rose 0.1%.

US sharemarkets rose on Wednesday, rebounding from a sharp two-day decline. Alcoa was one of the best advancers up 5.9% a day after its results topped expectations. The Dow Jones rose by 79 points or 0.5% with the S&P 500 index up by 0.5% and the Nasdaq rose 26 points or 0.6%.

US treasury prices rose on Wednesday (yields lower) as the Federal Reserve acknowledged the recent strengthening in the US economy but suggested it was unlikely to raise rates till the second half of 2015. US 2 year yields fell by 4 points to 0.48% while US 10 year yields fell by 1 point to 2.55%.

Major currencies rose against the US dollar on Wednesday. The Euro rose from lows near U$1.3605 to highs near US$1.3645, closing US trade near US$1.3640. The Aussie dollar rose from lows near US93.85c to highs near US94.25c and ended US trade near US94.10c. And the Japanese yen lifted from 101.85 yen per US dollar to JPY101.50, ending US trade near JPY101.60.

World oil prices fell on Wednesday on improved supply expectations from key Middle East producers. Brent crude fell for the eighth straight session, down by U62c or 0.6% to US$108.32 a barrel and the US Nymex price closed lower by US$1.34 or 1.3% to US$102.29 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Nickel lost 1.3% while zinc gained 0.5%. The Comex gold futures quote rose by US$7.80 to US$1,324.30 per ounce. Iron ore rose by US10c a tonne or 0.1% to US$96.60 a tonne.

Ahead: In Australia, employment data is released. In China, trade data is released. In the US, wholesale inventories are expected.

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