Australian Stock Market Report – Morning June 17, 2014

Morning Report
(06:05 AEST)

In US economic data, the New York Federal Reserve manufacturing index rose from +19.01 to +19.28 in June, above forecasts for a result near +15. Industrial production rose by 0.6% in May, just above forecasts. And capital flows into the US totalled US$136.8 billion in April after the previous month recorded outflows of US$126.1bn.

The International Monetary Fund has cut its forecast for US economic growth in 2014 from 2.8% to 2.0%.

European shares eased modestly on Monday with investors watching geopolitical events in Iraq, Kenya and Russia. Russia has cut off gas supplies to Ukraine over unpaid bills. The FTSEurofirst 300 index was down by 0.4% with the German Dax and UK FTSE both losing 0.3%. Australia´s major miners were higher in London trade with shares in BHP Billiton up by 0.8% while Rio Tinto edged 0.2% higher.

US sharemarkets were flat on Monday. Economic news was better than expected and merger and acquisition news buoyed investor sentiment. But investors mulled geopolitical events, the IMF economic growth downgrade and awaited the Federal Reserve decision later in the week. The Dow Jones rose by 5 points or less than 0.1% with the S&P 500 index up by 0.1% and the Nasdaq lifted by 10.5 points or 0.2%.

US long-term treasury prices were mixed on Monday as investors mulled economic data and awaited the Federal Reserve decision later in the week. US 2 year yields were up by 2 points to 0.468% while US 10 year yields were down 1 point to 2.60%.

Major currencies were mixed against the US dollar over the European and US sessions on Monday. The Euro lifted from lows near U$1.3515 to highs near US$1.3580, and closed US trade around US$1.3570. The Aussie dollar eased from highs near US94.15c to around US93.70c before finishing US trade around US94.00c. And the Japanese yen eased from 101.72 yen per US dollar to JPY101.94, ending US trade near JPY101.82.

World oil prices were mixed as investors watched developments in Iraq with the army making progress in pushing back rebel forces. Brent crude rose by US48c or 0.4% to US$112.94 a barrel but US Nymex closed lower by US1c to US$106.90 a barrel.

Base metal prices rose by up to 3.2% on the London Metal Exchange on Monday with nickel leading the gains. But other metals rose up to 1% while tin lost 0.7%. The Comex gold futures quote rose by US$1.20 an ounce to US$1,275.30 per ounce. Iron ore fell by US$1.90 a tonne or 2.1% on Monday to US$89.00 a tonne.

Ahead: In Australia, minutes of the last Reserve Bank Board meeting are released together with new car sales data. In the US data on consumer prices, housing starts and weekly chain store sales are released together with the NAHB housing market index.

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