Australian Stock Market Report – Morning June 4, 2014

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By Craig James, CommSec Chief Economist | June 4, 2014 9:29 AM EST

Morning Report
(06:05 AEST)
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In US economic data, factory orders rose by 0.7% in April, above the forecast 0.5% gain. Chain store sales in the latest week were up 3.5% on a year earlier, up from 3.2% in the previous week. And the ISM New York index rose from 627.4 to 630.1 in May. 

Reuters
Less than 24 hours after the U.S. government reported it was mostly done with its money-losing bailout of AIG, a Bloomberg News article out Tuesday explained how Wall Street banks are setting themselves up for the next systemic crisis by playing at financial alchemy in the derivatives market.

European shares eased on Tuesday in thin trade ahead of the European Central Bank meeting. The FTSEurofirst 300 index fell by 0.4% with the UK FTSE down 0.4% while the German Dax lost 0.3%. Australia´s major miners also eased in London trade with shares in BHP Billiton down 0.6% while Rio Tinto fell by less than 0.1%. 

US sharemarkets were slightly lower on Tuesday as investors elected to take some profits after key indices hit record highs on Monday. Shares in General Motors rose by 1.2% and Ford rose by 0.7% in response to good sales data. But shares in Krispy Kreme Doughnuts fell 14.8% after the company lowered earnings guidance. Shares in Quiksilver fell 41.1% after reporting a bigger quarterly loss. The Dow Jones index fell by 21 points or 0.1%, the S&P 500 fell by less than 0.1% and the Nasdaq lost 3 points or 0.1%. 

US long-term treasury prices eased on Tuesday (yields higher). Reuters reports: ´´The difference between the number of investors who said they are bearish on U.S. long-dated Treasuries and those who are bullish grew to its biggest in eight years, according to a J.P. Morgan survey released on Tuesday.´´ US 2 year yields rose by 1 point to 0.403% while US 10 year yields were up by 7 points to 2.597%. 

Major currencies were mixed against the US dollar over European and US sessions. The Euro rose from lows near US$1.3590 to highs near US$1.3645, before ending US trade around US$1.3625. The Aussie dollar fell from highs near US92.85c to lows near US92.45c before finishing US trade around US92.60c. And the Japanese yen eased from 102.28 yen per US dollar to JPY102.55, before ending US trade near JPY102.52. 

World oil prices were mixed in choppy trade on Tuesday as traders awaited central bank meetings later in the week. Brent crude fell by US1 cent to US$108.82 a barrel while US Nymex rose by US19c or 0.2% to US$102.66 a barrel. 

Base metal prices were higher by up to 2.2% on the London Metal Exchange on Tuesday. Lead was the best performer but nickel bucked the trend, falling by 1.0%. The Comex gold futures quote lifted from near 4-month lows on Tuesday, up by US50c an ounce or less than 0.1% to US$1,244.50 per ounce. Iron ore rose by US40c a tonne or 0.3% on Tuesday to US$92.50 a tonne. 

Ahead: In Australia, economic growth (GDP) figures for the March quarter are released together with new car sales and the Performance of Services index. In the US, the ISM services gauge and ADP employment report are released.

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(Photo: Reuters / )
Less than 24 hours after the U.S. government reported it was mostly done with its money-losing bailout of AIG, a Bloomberg News article out Tuesday explained how Wall Street banks are setting themselves up for the next systemic crisis by playing at financial alchemy in the derivatives market.
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