Australian Stock Market Report – Morning September 25, 2014

Scaffolding is seen at the construction site of a new home in Carlsbad, California September 22, 2014. U.S. manufacturing activity hovered at a near 4-1/2-year high in September and factory employment surged, supporting views of sturdy economic growth this quarter. The economic picture was further brightened by other data on Tuesday showing an acceleration in factory and services industry growth in some areas of the country. Housing, however, continues to plod along, with home price gains decelerating sharply in July. Picture taken September 22, 2014. REUTERS/Mike Blake (UNITED STATES - Tags: BUSINESS CONSTRUCTION REAL ESTATE)

* In US economic data, new home sales surged by a surprising18% in August to a seasonally adjusted rate of 504,000 units - the highest level in six years. Despite the rise in sales the stock of new houses lifted to a four-year high. At August's sales pace it would take 4.8 months to clear the supply of houses on the market.

* European shares rose for the first time in three sessions on Wednesday after data showed that Italian consumer confidence had risen for the first time in four months. Encouraging comments from ECB President Draghi also supported buying. Speaking in a French radio interview, Draghi said the ECB would maintain loose monetary policy till inflation lifts from near zero towards the ECB target of 2%. The FTSEurofirst 300 index rose by 0.8%. The German Dax rose by 0.7% while the UK FTSE gained 0.5%. And Australia's major miners were higher in London trade with shares in BHP Billiton up by 3.2% while Rio Tinto gained 2.4%.

* US sharemarkets rallied on Wednesday as better economic data and dovish Fed speeches supported sentiment. Chicago Fed President Evan said the central bank should be "exceptionally patient" in shifting monetary policy. The gains were broad-based with the S&P 500 snapping a three-day losing streak and lifting above its 14-day moving average. The Dow Jones index rose by 154 points or 0.9%. The broader S&P 500 index rose by 0.8% while the Nasdaq gained 47 points or 1%.

* US treasury prices fell on Wednesday (yields higher) as upbeat US data supported the bid for risk assets. Weak demand for the auction of $35 billion in 5 year notes added to the lift in yields. US 2 year yields rose by 5 points to 0.59% while US 10 year yields rose by 4 points to 2.57%.

* Major currencies were mostly weaker against the greenback over the European and US sessions on Wednesday. The Euro fell from highs near US$1.2865 to around US$1.2775, ending US trade near US$1.2780. The Aussie dollar fell from highs near US88.95c to lows around US88.50c before ending the US session near US88.75c. The Japanese yen weakened from 108.50 yen per US dollar to JPY109.05, ending US trade near JPY109.00.

* World oil prices reversed early losses in a choppy trading session on Wednesday following news that US crude stockpiles fell by 4.3 million barrels last week, against expectations of a build. Brent crude touched a two-year low before closing up by US32c or 0.3% to US$97.17 a barrel while the US Nymex price rose by US$1.24 a barrel or 1.4% to US$92.80 a barrel.

* Base metal prices were mostly higher on Wednesday with Nickel (up 1.6%) leading the gains. Other metals rose between 0.1%-1.1%. Gold prices fell on Wednesday with the Comex gold futures quote lower by US$2.50 an ounce or 0.2% to US$1,219.50 per ounce. Iron ore was unchanged on Wednesday at US$79.40 a tonne.

Ahead: In Australia, population data, financial accounts and job vacancies are released. RBA Governor Stevens speaks at the Melbourne Economic Forum. In the US durable goods orders are released.

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