Australian Stock Market Report – Morning 1/3/14

US MORNING REPORT
(8am AEDT)

In US economic news, jobless claims fell for the second consecutive week down by 2,000 to 339,000 last week - suggesting labour market continued to steadily improve. The US Markit PMI lifted from 54.7 to 55.0 in December - the fastest pace in 11 months. Across the subindices a solid increase was recorded in output and employment. US ISM manufacturing factory activity eased marginally from 57.3 to 57.0 in December. US construction spending rose by 1% to a five year high.

European shares edged lower on Thursday, as soft Chinese and French manufacturing data prompted investors to lock in recent profits. Shares in Italian automaker Fiat bucked the trend, soaring 16% in volumes more than six times daily averages, after it struck a $4.35 billion deal to gain full control of Chrysler without raising fresh funds. The FTSEurofirst 300 index fell by 0.8% with the UK FTSE fell by 0.5% and the German Dax lost 1.6%. Mining shares were weaker with BHP Billiton shares down by 0.9% in London trade while Rio Tinto fell by 1.2%.

US share markets fell in their first day of trade in 2014 as investors booked recent profits. All 10 S&P 500 sectors were lower, with tech stocks amongst the biggest drags after Wells Fargo downgraded Apple to ´´market perform´´. Apple shares fell by 1.4%. At the close of trade, the Dow Jones was down by 135 points or 0.8% while the S&P 500 fell by 0.9% and the Nasdaq fell by 34 points or 0.8%.

US treasury prices rose on Thursday (yields lower) in light trade. US 2 year yields fell by 1 points to 0.38% while US 10 year yields fell by 5 points to 2.98%.

The US dollar rose against the Euro on Thursday as an array of improving economic data supported expectations that the Federal Reserve will gradually scale back its bond purchases. The Euro fell from highs around US$1.3755 to lows near US$1.3630 and was trading around US$1.3665 in late US trade. The Aussie dollar rose from lows near US88.40c to highs near US89.40c, and held near US89.05c in late US trade. And the Japanese yen rose from lows near 105.45 yen per US dollar to highs near JPY104.50 and was near JPY104.70 in late trade.

World oil prices fell on Thursday, as Libya prepared to restart a major oilfield and on speculation of a sharp rise in US crude stockpiles. Brent crude fell by US$2.45 or 2.2% to US$108.35 a barrel while US Nymex crude fell by US$2.98 or 3% to US$95.44 a barrel.

Base metal prices rose on the London Metal Exchange on Thursday, with the exception of tin (down 1.25). Copper rose 0.4% to a seven-month high, lifted by shrinking supplies and prospects of a ongoing global recovery. Copper stocks in LME warehouses fell a further 725 tonnes to 366,485 - a one year low. Gold rose on Thursday after losses in the prior two sessions. The Comex gold futures price lifted by US$11.20 or 0.9% to US$1,225.20 per ounce. The iron ore price rose by US80c to US$135.00 a tonne.

Ahead: In Australia, no economic data is released. In the US, no economic data is expected.

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