Australian Stock Market Report – Morning June 6, 2014

Morning Report
(06:05 AEST)

The European Central Bank cut interest rates by 10 basis points: the refinancing rate now stands at 0.15%; the deposit rate stands at -0.10%; and the marginal lending rate or emergency borrowing rate stands at 0.40%. The ECB also introduced a package of targeted measures to further boost lending.

In US economic data, initial jobless claims (claims for unemployment insurance) rose by 8,000 to 312,000 in the latest week, slightly above forecasts. Planned layoffs over the coming year rose from 40,298 to 52,961 in the latest month according to the survey by Challenger.

European shares rose on Thursday after the European Central Bank cut rates as expected and vowed further stimulus measures if they were needed. The FTSEurofirst 300 index rose by 0.4% with the German Dax up by 0.2%. But the UK FTSE went against the trend, falling by 0.1%. Australia´s major miners were mixed in London trade with shares in BHP Billiton down by 0.4% while Rio Tinto rose by 0.5%.

US sharemarkets rose on Thursday after the European Central Bank cut rates and vowed more measures if needed to combat deflation. The Dow Jones index rose by 98.6 points or 0.6% to record highs, the S&P 500 rose by 0.7% to record highs and the Nasdaq gained 44.6 points or 1.1%.

US long-term treasury prices were higher on Thursday (yields lower) after the European Central Bank cut rates as expected and vowed more stimulus if necessary. US 2 year yields were down 2 points to 0.383% while US 10 year yields fell by 2 points to 2.584%.

Major currencies gyrated against the US dollar after the European Central Bank cut interest rates. The Euro fell from near US$1.3610 to US$1.3505, but promptly rebounded and closed US trade around US$1.3655. The Aussie dollar rose from US92.75c to US93.45c before finishing US trade around US93.35c. And the Japanese yen swung between 102.32 yen per US dollar and JPY102.72, before ending US trade near JPY102.38.

World oil prices were mixed on Thursday. Brent crude rose by US39 cents to US$108.79 a barrel with European buyers still worried about short-term oil supplies. The Russian President will have discussions with British, German and French counterparts at D-Day anniversary events. But US Nymex eased by US16 cents to US$102.48 a barrel.

Base metal prices were higher by up to 0.5% on the London Metal Exchange on Thursday with aluminium leading the way. But copper went against the trend, falling by 0.5%. The Comex gold futures quote rose by US$9.00 an ounce or 0.7% to US$1,253.30 per ounce. It was the biggest one-day lift in the gold price in three weeks. Iron ore fell by US30c a tonne or 0.3% on Thursday to US$94.30 a tonne.

Ahead: In Australia, no major economic data is released. In the US, the non-farm payrolls (employment) data is issued. In China, the trade figures are released on Sunday.

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