Australian Stock Market Report – Morning September 19, 2014

Unemployment — Toyota representative Brandi Hall (L) assists a U.S. military veteran applicant at a hiring fair for veteran job seekers in Washington in this file photo taken April 9, 2014. The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, but not enough to change views the labor market was strengthening. REUTERS/Gary Cameron/Files (UNITED STATES - Tags: MILITARY BUSINESS EMPLOYMENT)

* In US economic data, jobless claims fell by 36,000 to 280,000 last week - the lowest level since July. US housing starts fell 14.4% in August after an outsized 22.9% gain in July. US building permits fell by 5.6% in August after rising by 8.6% in July. On a more positive note, housing starts in the South (where about half of all US housing construction takes place) rose to an eight month high, while permits in the region rose to their highest level since April 2008.

* European shares rose to a two-week high on Thursday with investors getting their first opportunity to react to the US Fed's pledge to keep interest rates low. Equities also got a lift after the ECB drew far less demand than expected for its new four-year loan facility to banks (TLRO), raising expectations it may eventually opt for more radical stimulus measures. The FTSEurofirst 300 index rose by 0.9% with the German Dax up by 1.4% while the UK FTSE rose by 0.6%. Australia's major miners were mixed in London trade with shares in BHP Billiton flat while Rio Tinto was down by 0.3 per cent.

* US sharemarkets ended higher on Thursday with the Dow Jones and S&P 500 closing at record highs. The Fed's commitment to ultra low rates was the key driver.The Dow Jones index rose by 109 points or 0.6% to record highs. The broader S&P 500 index lifted by 0.5% while the Nasdaq gained 31 points or 0.7%.

* US treasury prices were mixed on Thursday as traders continued to have differing views on how quickly the US Fed make look at lifting interest rates. US 2 year yields were flat at 0.56% while US 10 year yields fell by 1 point to 2.61%.

* Major currencies fell in response to the upbeat US jobless claims number before losing ground in late trade. The US dollar index rose to an intra-day four-year high. The Euro fell to lows near US$1.2955 before lifting to highs near US$1.2925, and ending US trade around US$1.2920. The Aussie dollar touched early lows near US89.25c before lifting to highs around US89.90c and ending the US session near US89.80c. And the Japanese yen eased from 108.50 yen per US dollar to JPY108.90, ending US trade near JPY108.70.

* World oil prices fell on Thursday as traders continued to react to the sharp lift in US crude inventories in the prior session. Also a stronger US dollar weakened the purchasing power of commodity buyers in Asia and Europe. Brent crude fell by US$1.27 to US$97.70 a barrel with the US Nymex price lost US$1.35 a barrel or 0.7% to US$93.07 a barrel.

* Base metal prices fell by up to 1.3% on Thursday with the exception of tin (up 0.5%). Lead fell by 1.3% with copper down 1.2%. Gold fell on Thursday to an eight month low. The Comex gold futures quote fell by US$9 to US$1,226.90 per ounce. Iron ore fell by US$1.20 or 1.4% on Thursday to US$83 a tonne.

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