Australian Stock Market Report – Morning June 19, 2014

Morning Report
(6:10 AEST)

The US Federal Reserve has reduced its monthly asset purchases by US$10 billion to US$35 billion a month. The Federal Reserve has cut the forecast range for economic growth in 2014 from 2.8-3.0% to 2.1-2.3%. Fed chief Janet Yellen said that weaker-than-expected growth could delay any move to lift interest rates.

In US economic data, the current account deficit stood at US$111.2 billion in the March quarter, above forecasts tipping a deficit near US$96.9 billion. The weekly mortgage market index fell by 9.2% in the latest week with the purchase index down by 4.7% and the refinancing index down by 12.7%.

European shares were steady to slightly higher ahead of the Federal Reserve meeting. The FTSEurofirst 300 index was flat with the German Dax up 0.1% while the UK FTSE gained 0.2%. Australia´s major miners were higher in London trade with shares in BHP Billiton up by 1.2% while Rio Tinto rose by 1.0%.

US sharemarkets rose on Wednesday after the Federal Reserve suggested that weaker-than-expected economic growth could delay any move to lift interest rates. The Dow Jones rose by 98 points or 0.6% with the S&P 500 index up by 0.8% and the Nasdaq lifted by 25.6 points or 0.6%.

US long-term treasury prices rose on Wednesday (yields lower) after the Federal Reserve chief suggested that rate hikes could be delayed. US 2 year yields were down by 3 points to 0.452% while US 10 year yields were down by 6 points to 2.595%.

Major currencies whipsawed against the US dollar after the Federal Reserve decision but finished US trade higher against the greenback. The Euro rose from lows near U$1.3540 to highs near US$1.3600, and closed US trade around the highs. The Aussie dollar lifted from lows near US93.30c set just after the Fed decision to US94.05c and ended US trade around session highs. And the Japanese yen lifted from 102.30 yen per US dollar just after the Fed decision to JPY101.88, ending US trade near the strongest levels.

World oil prices were again mixed on Wednesday as traders dissected economic data and developments in Iraq Brent crude rose by US81c or 0.7% to US$114.26 a barrel but US Nymex closed lower by US39c to US$105.97 a barrel.

Base metal prices were generally higher on the London Metal Exchange on Wednesday with aluminium leading the gains, up by 1.4%. But nickel lost 2.0% and copper fell by 0.1%. The Comex gold futures quote rose by US$1.30 an ounce or 0.1% to US$1,273.30 per ounce. Iron ore rose by US$1.00 a tonne or 1.1% on Wednesday to US$90.30 a tonne.

Ahead: In Australia, the December quarter population data is released together with figures showing employment by industry. In the US, data on weekly claims for unemployment insurance are issued together with the leading index and Philadelphia Federal Reserve index.

[Kick off your trading day with our newsletter]