Australian Stock Market Report – Morning 1/31/14

US MORNING REPORT
(8am AEDT)

In US economic news, the advance reading of economic growth (GDP) for the December quarter was at 3.2% - in line with forecasts. New claims for unemployment insurance rose by 18,000 to 348,000 in the latest week - above forecasts for a result near 330,000. And the pending home sales index fell 8.7% to 92.4 in December.

European shares generally rose on Thursday as encouraging US economic growth figures prompted bargain hunting by investors. The FTSEurofirst 300 index rose by 0.3% with the UK FTSE down by 0.1% and the German Dax up by 0.4%. Mining shares were mixed in London trade with BHP Billiton shares up by 0.4% while Rio Tinto lost 0.2%.

US sharemarkets rebounded again on Thursday in response to positive economic news and earnings figures. Shares in Facebook rose by 14.1% in response to earnings news. Shares in Google rose 2.6% after it sold the Motorola handset division to Lenovo for $2.91 billion. At the close of trade, the Dow Jones was higher by almost 110 points or 0.7%. The S&P 500 lifted by 1.1% while the Nasdaq was up by 71 points or 1.8%.

US long-term treasury prices fell on Thursday (yields higher) as investors switched affections from ´´safe haven´´ assets to equities and commodities. US Treasury issued $35 billion in five-year notes and $29 billion in seven-year debt on Thursday. US 2 year yields fell 1 point to 0.35% while US 10 year yields rose by 2 points to 2.693%.

Major currencies were mixed against the greenback in European and US trade on Thursday. The Euro fell from highs near US$1.3655 to US$1.3545, and was near US$1.3550 in afternoon US trade. The Aussie dollar rose from lows near US87.20c to highs near US88.00c, and was near US87.80c in afternoon US trade. And the Japanese yen weakened from102.11 yen per US dollar to JPY102.87 and was trading near JPY102.71 in afternoon US trade.

World oil prices rose on Thursday as continued cold weather in the US north-east boosted demand for energy products. Also supporting prices was data from the US Energy Information Administration showed that distillate stocks fell by more than expected in the latest week. However the gains were limited as investors responded to a soft purchasing managers index in China. Brent crude rose by US10c or 0.1% to US$107.95 a barrel while US Nymex crude rose by US87c to US$98.23 a barrel.

Base metal prices fell between 0.3-1.3% on the London Metal Exchange on Thursday with copper down the least and lead down the most. The gold price also fell as investors reduced holdings of ´´safe-haven´´ assets and the greenback lifted against the Euro and Japanese yen. The Comex gold futures fell by US$19.70 or 1.6% to US$1,242.50 per ounce. The iron ore price was unchanged at US$122.60 a tonne.

Ahead: In Australia data on producer prices and private sector credit are released. In the US, consumer sentiment, personal spending, employment costs and the Chicago purchasing managers index are issued.

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