Australian Stock Market Report – Morning June 20, 2014

U.S. President Barack Obama speaks at the Democratic National Committee's (DNC) annual Lesbian, Gay, Bisexual and Transgender (LGBT) gala in New York June 17, 2014. REUTERS/Kevin Lamarque REUTERS/Kevin Lamarque

Morning Report
(6:10 AEST)

US President Obama has announced that the US will send 300 military advisers to Iraq and was still keeping open the possibility of targeted air strikes against rebel forces.

In US economic data, claims for unemployment insurance fell from 318,000 to 312,000 in the latest week, lower than forecasts tipping a result of 314,000. The Philadelphia Federal Reserve index rose from +15.4 to +17.8 in June. The leading index rose by 0.5% in May, down slightly on forecasts.

European shares rose on Thursday on expectation that the US Federal Reserve will leave interest rates lower for longer. The FTSEurofirst 300 index lifted by 0.4% with the German Dax up by 0.7% while the UK FTSE gained 0.4%. Australia´s major miners were higher in London trade with shares in BHP Billiton up by 1.0% while Rio Tinto rose by less than 0.1%.

US sharemarkets were flat on Thursday. Investors were watchful about the situation in Iraq and mulled the consequences of Wednesday´s Federal Reserve decision. The Dow Jones rose by 15 points or 0.1% with the S&P 500 index up by 0.1% and the Nasdaq fell by 3.5 points or 0.1%.

US long-term treasury prices fell on Thursday (yields higher) as traders re-assessed positions after the Federal Reserve meeting. An auction of $7 billion in new 30-year Treasuries Inflation-Protected Securities (TIPS) was completed with a lift in yields of around 3 basis points. Treasury will sell $94 billion in new two-year, five-year and seven-year notes next week. US 2 year treasury yields were up by 1 point to 0.456% while US 10 year yields were up by 4 points to 2.628%.

Major currencies finished US trade largely steady compared with the Asian close on Thursday. The Euro rose from lows near U$1.3590 to highs near US$1.3640, and closed US trade around US$1.3600. The Aussie dollar eased from highs near US94.30c to lows near US93.87c and ended US trade around US93.95c. And the Japanese yen eased from 101.72 yen per US dollar to JPY101.99, ending US trade near JPY101.95.

World oil prices rose on Thursday on continued to rise concerns that the violence in Iraq will lead to supply disruptions from the world´s second largest oil exporter. Brent crude rose by US80c or 0.7% to US$115.06 a barrel and US Nymex closed higher by US46c to US$106.43 a barrel.

Base metal prices were generally higher on the London Metal Exchange on Thursday with aluminium and zinc leading the gains, up by 0.9%. But nickel lost 1.0%. Gold rose sharply in response to the ongoing instability in Iraq as well as a weaker greenback with the Comex gold futures quote up by US$41.40 an ounce or 3.3% to US$1,314.10 per ounce. Iron ore rose by US40c a tonne or 0.4% on Thursday to US$90.70 a tonne.

Ahead: In Australia, the CBA business sales index is released. In the US the weekly Economic Cycle Research Institute index is released.

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