Australian Stock Market Report – Morning 2/27/14

US MORNING REPORT
(8am AEDT)

In US economic data, new home sales soared by 9.6% in January to a 5-1/2 year high of 468,000. Economists had tipped an annual rate of sales near 400,000. But the weekly mortgage market index fell by 8.5% to 348.5 in the latest week with refinancing down 11.4% and new purchases down 3.5%.

European shares eased on Wednesday. Shares in luxury goods retailers fell on concern about conditions in emerging markets. And Credit Suisse lost 2.5% in response to a new investigation of its practices by a US Senate subcommittee. The FTSEurofirst 300 index fell by 0.2% with the UK FTSE down by 0.5% and the German Dax lost 0.4%. Mining shares fell again in London trade with BHP Billiton down 0.6% while Rio Tinto lost 0.9%.

US sharemarkets were little-changed on Wednesday. Shares in retailers, Target and Lowe´s, rose by between 5-7% in response to their latest earnings results. The lift in new home sales also boosted investor sentiment. At the close of trade, the US Dow Jones was up almost 19 points or 0.1% with the S&P 500 up less than 0.1% and the Nasdaq gained 4.5 points or 0.1%.

US long-term treasury prices rose again on Wednesday (yields lower). New home sales data was stronger than expected but traders clung to bonds after Russian President Vladimir Putin put combat troops on high alert for war games near Ukraine. Traders also awaited testimony by the Federal Reserve chief Janet Yellen to the Senate Banking Committee. US 2 year yieldswere flat at 0.328% while US 10 year yields fell by 4 points to 2.665%.

Major currencies fell against the greenback over the European and US sessions. The Euro eased from US$1.3755 to and US$1.3660 and was near US$1.3685 in afternoon US trade. The Aussie dollar fell from highs near US90.25c to lows near US89.40c, and was around US89.65c in afternoon US trade. And the Japanese yen eased from levels near 102.09 yen per US dollar to JPY102.59 and was trading near JPY102.35 in afternoon US trade.

World oil prices rose on Wednesday. Latest data showed that US crude inventories rose by less than expected in the latest week, while stocks at the Cushing, Oklahoma delivery point fell for the fourth straight week. Brent crude rose by US1c to US$109.83 a barrel while US Nymex crude rose by US76c or 0.7% to US$102.59 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Tin rose the most, up by 1.2%, but nickel lost 0.6% and copper fell by 0.4%. The gold price fell on Wednesday after the US dollar rose in response to a strong report on new home sales. The Comex gold futures price fell by US$14.70 or 1.1% to US$1,328.00 per ounce. The iron ore price fell by US$1.30 on Wednesday to US$117.80 a tonne.

Ahead: In Australia, business investment data is released. In the US, Federal Reserve chief, Janet Yellen, delivers testimony. Weekly data on unemployment benefit claims is released together with durable goods orders.

[Kick off your trading day with our newsletter]