Australian Stock Market Report – Morning June 12, 2014

Morning Report
(06:05 AEST)

In US economic data, the Federal Budget was in deficit by US$130 billion in May, in line with market expectations. New mortgage applications rose by 10.3% in the latest week with the purchase index up 9.3% and the refinancing index up 11%.

The World Bank has trimmed its forecast for global economic growth in 2014 from 3.2% to 2.8%.

European shares fell on Wednesday, dragged down by the travel/airlines sector. Shares in Lufthansa fell by 14.2% after issuing a profit warning. The FTSEurofirst 300 index fell by 0.5% with the German Dax down by 0.8% while the UK FTSE fell by 0.5%. Australia´s major miners were higher in London trade with shares in BHP Billiton and Rio Tinto both up by 0.3%.

US sharemarkets were lower on Wednesday as investors decided to book profits in response to more downbeat corporate and economic news. The Dow Jones fell by 102 points or 0.6% with the S&P 500 down by 0.4% and the Nasdaq lost 6 points or 0.1%.

US long-term treasury prices rose slightly on Wednesday (yields lower) as investors took profits in equities markets. US Treasury sold US$21 billion of 10-year notes on Wednesday, and will sell $13 billion in 30-year bonds on Thursday. US 2 year yields were down 1 point to 0.431% while US 10 year yields fell 1 point to 2.635%.

Major currencies ended the US session little-changed against the US dollar when compared with the end of the Asian session on Wednesday. The Euro held between U$1.3520 and US$1.3560, and closed US trade around US$1.3530. The Aussie dollar held between US93.70c and US94.05c before finishing US trade around US93.80c. And the Japanese yen lifted from 102.35 yen per US dollar to JPY101.86, before ending US trade near JPY102.01.

World oil prices rose modestly on Wednesday after OPEC oil ministers agreed to keep the crude oil production quotas for the group at 30 million barrels a day. Oil prices were also supported by fears about short-term global supplies on news of violence in Iraq. And US crude oil inventories fell in the latest week. Brent crude rose by US43c or 0.4% to US$109.95 a barrel with US Nymex up by US5 cents to US$104.40 a barrel.

Base metal prices were lower by up to 2.6% on the London Metal Exchange on Wednesday with nickel leading the declines. But copper went against the trend, rising by 0.5%. The Comex gold futures quote rose by US$1.10 an ounce or 0.1% to US$1,261.20 per ounce. Iron ore fell by US10c a tonne or 0.1% on Wednesday to US$93.50 a tonne.

Ahead: In Australia, monthly labour force data is released. In the US, retail sales data is released together with import and export prices and figures showing new claims for unemployment insurance in the latest week.

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