Australian Stock Market Report – Morning June 26, 2014

Morning Report
6:05 AEST)

In US economic data, durable goods orders fell by 1.0% in May, below forecasts tipping a flat result. Excluding defence equipment, orders rose by 0.6%. The final reading of economic growth (GDP) in the March quarter showed a decline of 2.9%, bigger than the 1.7% decline that was forecast.

European shares fell on Wednesday as investors continued to watch developments in Iraq. The FTSEurofirst 300 index lost 1.1%, the German Dax fell by 0.7% while the UK FTSE eased by 0.8%. Australia´s major miners finished mixed in London trade with shares in BHP Billiton down by 1.1% while Rio Tinto rose by less than 0.1%.

US sharemarkets rose in the first two hours of trade then trended sideways over the session. Investors shrugged off the economic growth figures while watching developments in Iraq. The Dow Jones rose by 49 points or 0.3% with the S&P 500 index up by 0.5% and the Nasdaq was higher by 29 points or 0.7%.

US long-term treasury prices were higher (yields fell) in response to softer-than-expected economic data. US Treasury sold $35 billion in five-year notes on Wednesday and will sell $29 billion in seven-year notes on Thursday. US 2 year yields were up 2 points to 0.48% while US 10 year yields fell by 2 points to 2.56%.

Major currencies were stronger against the US dollar in European and US trade on Wednesday after the US GDP figures. The Euro rose from lows near U$1.3600 to highs near US$1.3650, and closed US trade around US$1.3630. The Aussie dollar lifted from lows near US93.55c to highs near US94.00c and ended US trade around session highs. And the Japanese yen lifted from 101.94 yen per US dollar to JPY101.61, ending US trade near JPY101.85.

World oil prices were mixed on Wednesday. Brent crude fell by US46c or 0.4% to US$114.00 a barrel as supply fears receded. But the US Nymex price closed higher by US47c or 0.4% to US$106.50 a barrel in response to a Government decision to permit exports of condensate or lightly refined oil. But the Government confirmed the ban on the exports of crude oil.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Nickel soared by 2.5% but other metals rose up to 0.4% while lead fell 0.8% and tin lost 0.3%. The Comex gold futures quote rose for the sixth straight day, up by US$1.30 an ounce or 0.1% to US$1,322.60 per ounce. Iron ore rose by just US40c a tonne or 0.4% to US$93.70 a tonne.

Ahead: In Australia, the Financial Accounts are released together with job vacancies. In the US, data showing weekly claims for unemployment insurance are expected together with personal income and spending figures and the Kansas City Fed index.

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