Australian Stock Market Report – Morning June 3, 2014

Morning Report
(07:00 AEST)

In US economic data, the ISM manufacturing reading was initially released showing an unexpected dip from 54.9 to 53.2 in May. However according to multiple reports, ISM corrected itself by saying manufacturing activity actually improved to 55.4 in May. That helped ease concerns about the economy, and the Dow Jones industrial average quickly climbed back into positive territory on the altered result. US construction spending rose by 0.2% in April.

European shares lifted on Monday buoyed by upbeat Chinese economic data which showed that Chinese factory activity expanded at the fastest pace in five months. Mining stocks were the main beneficiaries with the STOXX Basic resources index lifted by 1.5%. The FTSEurofirst 300 index lifted by 0.2%, and the UK FTSE rose 0.3% while the German Dax was up by 0.1%. Big miners also lifted in London trade with shares in BHP Billiton up by 1% while Rio Tinto gained 2.1%.

US sharemarkets ended slightly higher on Monday with the exception of the Nasdaq. Early losses were erased after the US manufacturing read was revised higher. Industrial and cyclical stocks recorded healthy gains including Caterpillar which rebounded by 1.2%. Apple shares fell 1.2% after releasing a new operating system for its Mac computers and mobile devices. The Dow Jones index rose by 26 points or 0.2% to record highs. The S&P 500 rose by 0.1% to fresh record highs but the Nasdaq lost 5 points or 0.1%.

US long-term treasury prices eased on Monday (yields higher) after the ISM manufacturing read was corrected. US 2 year yields rose by 1 points to 0.39% while US 10 year yields were up by 5 points to 2.53%.

Major currencies were weaker against the US dollar over European and US sessions. The Euro fell from highs near US$1.3630 to lows near US$1.3590, before ending US trade around US$1.3600. The Aussie dollar fell from highs near US92.55c to lows near US92.35c before finishing US trade around US92.45c. And the Japanese yen eased from 101.90 yen per US dollar to JPY102.45, before ending US trade near JPY102.40.

World oil prices fell in choppy trade on Monday, weighed by a stronger US dollar. Brent crude fell by US55c or 0.5% to US$108.86 a barrel while US Nymex fell by US24c or 0.2% to US$102.47 a barrel.

Base metal prices were higher by up to 1.6% on the London Metal Exchange on Monday. Zinc was the best performer followed by lead and copper both recording +1% gains. The Comex gold futures quote fell on Monday, hitting near 4-month lows, down by US$2 an ounce or 0.2% to US$1,244.00 per ounce. Iron ore rose by US30c a tonne or 0.3 on Monday to US$92.10 a tonne.

Ahead: In Australia, retail trade and the current account balance are released. The RBA Board meeting take place. In the US, factory orders are released.

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