Australian Stock Market Report - Morning May 12, 2015

An investor points to computer screens showing stock information at a brokerage house in Nantong, Jiangsu province, China, May 11, 2015. Chinese stocks rose 3 percent on Monday in volatile conditions, boosted by property and infrastructure shares after the central bank cut interest rates for the third time in six months. REUTERS/China Daily

In US economic data, the employment trends index rose from 127.7 to 128.22 in May.

European shares were mixed ahead of continued talks between Greece and its creditors. Encouragingly, Greece paid about 750 million euros to the International Monetary Fund on Monday, a day before it was due. The French market fell 1.2%, dragged down by a 2.1% fall in shares in Airbus. On Saturday an Airbus A400M military transport plane crashed in Seville. There was also profit-taking in some markets after solid gains on Friday. The FTSEurofirst 300 rose by 0.3% but the German Dax lost 0.3% while the UK FTSE lost 0.2%. Mining shares rose in London trade with BHP Billiton up by 0.7% while Rio Tinto lifted by 1.1%.

US sharemarkets eased on Monday. Investors were focussed on the Greek debt situation, slower Chinese economic growth, higher equity valuations, upcoming economic data and lower energy prices. The Dow Jones fell by 86 points or 0.5% after trading in an 110 point range. The S&P 500 index fell by 0.5% and the Nasdaq eased by 10 points or 0.2%.

US treasury prices fell on Monday (yields higher) with traders preparing for more bond supply this week. US Treasury is due to sell $24 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. US 2 year yields rose by 3 points to 0.62% while US 10 year yields rose by 12 points to 2.28%.

Major currencies were again mixed against the greenback over the European and US sessions on Monday. The Euro gravitated between US$1.1130 and US$1.1190 and ended US trade around US$1.1150. The Aussie dollar held between US78.80c and US79.20c before ending US trade near US78.90c. And the Japanese yen eased from 119.81 yen per US dollar to JPY120.14 and was around JPY120.12 at the US close.

World oil prices were lower on Monday. While there were hopes for greater oil demand after China cut interest rates, data showed the number of rigs drilling for oil in the Permian shale basin rose in the past week. Investors await the monthly report from the International Energy Agency on Wednesday. Brent crude fell by US63c or 1.0% to US$64.91 a barrel while US Nymex crude fell by US14c or 0.2% to US$59.25 a barrel.

Base metal prices fell by between 0.1-2.1% with zinc faring worst and nickel down the least. Gold continues to track in tight ranges with the Comex gold futures price down by US$5.90 an ounce or 0.5% to US$1,183.00 per ounce. Iron ore rose by US$2.00 or 3.2% on Monday to US$62.50 a tonne.

Ahead: In Australia, housing finance and credit/debit card lending figures are released. The Federal Budget is handed down at 7.30pm. In the US, the JOLTS job openings survey is released with weekly chain store sales, monthly budget data and the NFIB small business optimism index.

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