Australian Stock Market Report – Morning June 5, 2014

Morning Report
(06:05 AEST)

In US economic data, the ISM services index lifted from 55.2 to a nine-month high of 56.3 in May, ahead of the 55.5 consensus forecast. The ADP national employment index showed that 179,000 private sector jobs were created in May, short of the 210,000 consensus forecast. And the trade deficit rose from US$40.4 billion to US$47.24 billion in April, above the consensus estimate of US$40.8 billion.

European shares were generally flat ahead of the European Central Bank meeting. Data showed that the 18-nation euro zone region grew by just 0.2% in the March quarter. The FTSEurofirst 300 index fell by less than 0.1% with the UK FTSE down 0.3% while the German Dax rose by 0.1%. Australia´s major miners were higher in London trade with shares in BHP Billiton up by 0.4% while Rio Tinto rose by 0.3%.

US sharemarkets were slightly higher in light trade. Investors weren´t keen to take on new positions ahead of the European Central Bank policy meeting and release of US employment data. The Dow Jones index rose by 15 points or 0.1%, the S&P 500 rose by 0.2% and the Nasdaq gained 17.6 points or 0.4%.

US long-term treasury prices were little-changed on Wednesday. Economic data was mixed and traders awaited employment figures on Friday. US 2 year yields were down 1 point to 0.399% while US 10 year yields were flat at 2.604%.

Major currencies were directionless against the US dollar over European and US sessions. The Euro held between US$1.3595 and US$1.3635, before ending US trade around US$1.3600. The Aussie dollar held between US92.55c and US92.85c before finishing US trade around US92.75c. And the Japanese yen held between 102.44 yen per US dollar and JPY102.73, before ending US trade near JPY102.72.

World oil prices were slightly lower on Wednesday as traders awaited the European Central Bank meeting and US employment data. Brent crude fell by US42 cents to US$108.40 a barrel while US Nymex eased by US2 cents to US$102.64 a barrel.

Base metal prices were lower by up to 1.5% on the London Metal Exchange on Wednesday with lead and copper the worst performers. The Comex gold futures quote fell by just US20c an ounce or less than 0.1% to US$1,244.30 per ounce. Iron ore rose by US$2.10 a tonne or 2.2% on Wednesday to US$94.60 a tonne.

Ahead: In Australia, international trade data is released. The European Central Bank meets to decide policy settings. In China, the HSBC services purchasing managers index is issued. In the US, the weekly data on claims for unemployment insurance is released together with the Challenger job layoff series.

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