Australian Stock Market Report: Morning Report

US average weekly hours worked fell to a record low 33 hours, adding further downward pressure to consumer spending. US factory orders rose by a surprising 1.2pct in May - marking the best result in 11 months.

The European Central Bank left its key policy rate unchanged today at 1.0pct, as expected. The ECB's view on the economic outlook, was unchanged from the June meeting. Based on the recent positive signs in data, the ECB is looking for a slower rate of contraction from the second half of the year. Quarterly growth isn't expected to turn positive until the second half of 2010.

US sharemarkets fell in response to the weaker economic data. The S&P retailers index lost 3.9pct. Energy stocks followed the oil price lower, with the S&P energy index down by 3.6pct. The US Dow Jones lost 218 points or 2.6pct with the S&P 500 down 2.9pct and the Nasdaq lower by 49 points or 2.7pct.

US treasuries fell (yields higher) after a rally in early trade. The weak labour market data initially boosted the demand for treasuries before investors sold on concerns of rising supply. Next week $73billion in treasury notes is expected to be auctioned. US 10yr yields fell by 5pt to 3.50pct while US 2yr yields were lower by 6pts to 0.99pct.

The US dollar rallied against major currencies on Thursday. The Euro fell from highs near US$1.4125 to around US$1.3995, before ending US trade near US$1.4000. The Aussie dollar fell from highs near US80.50c to US79.30c, ending US trade around US79.45c. And the Japanese yen lifted from lows around 96.80 yen per US dollar to near JPY95.75, ending US trade around JPY95.90.

Crude oil prices fell again on Thursday in response to the weaker economic data and rising US inventories. The August Nymex crude contract fell by US$2.45 or 3.5pct to US$66.86 a barrel. London Brent crude fell by US$2.03 to US$66.76 a barrel.

Base metal prices were weaker on the London Metal Exchange as the US dollar strengthened. Lingering concerns on a prolonged global recovery also weighed on prices. Lead fell by 2.4pct. And the price of gold followed oil prices lower. The August Comex gold contract fell by US$10.30 an ounce to US$931.

Ahead: In Australia, car sales data is released. US markets are closed for the independence day holiday.