Australian Stock Market Report – Morning June 11, 2014

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By Craig James, CommSec Chief Economist | June 11, 2014 8:49 AM EST

Morning Report
(06:05 AEST)

In US economic data, wholesale sales rose by 1.3% in April, above forecasts centred on a 0.8% gain. Inventories rose by 1.1%, ahead of forecasts suggesting a 0.5% gain. And weekly chain store sales were up by 3.3% on a year earlier, down from the 3.5% gain in the previous week.

European shares rose again on Tuesday with investors favouring defensive blue-chip stocks. The FTSEurofirst 300 index rose by 0.3% with the German Dax up 0.2%. But the UK FTSE eased slightly, down by less than 0.1%. Interestingly the Swiss market rose by 1.1%, lifting to 6-1/2 year highs. Australia´s major miners were lower in London trade with shares in BHP Billiton down by 0.9% while Rio Tinto lost 0.8%. 

US sharemarkets were flat on Tuesday in the absence of major economic or corporate news to set direction. Shares in eBay fell by 2.7% on news that the head of its PayPal payments unit, David Marcus, had left to join Facebook. Shares in Radioshack lost 10.4% in response to weaker-than-expected sales. The Dow Jones index rose by 2.8 points or less than 0.1% to record highs. The S&P 500 fell by less than 0.1%. And the Nasdaq gained 1.8 points or less than 0.1%. 

US long-term treasury prices eased again on Tuesday (yields higher) as investors continued to become more confident about the global economy. US Treasury sold $28 billion in three-year notes with demand described as ´´lukewarm´´. Treasury will sell $21 billion of 10-year notes on Wednesday, and $13 billion in 30-year bonds on Thursday. US 2 year yields were up by 2 points to 0.443% while US 10 year yields rose by 4 points to 2.638%. 

Major currencies were again mixed against the US dollar in European and US trade on Tuesday. The Euro fell in early European trade from near US$1.3600 to US$1.3535, and closed US trade around US$1.3545. The Aussie dollar held between US93.50c and US93.85c before finishing US trade around US93.75c. And the Japanese yen swung between 102.20 yen per US dollar and JPY102.40, before ending US trade near JPY102.35. 

World oil prices were lower on Tuesday as investors decided to take profits ahead of Wednesday´s OPEC oil ministers meeting and the release of weekly US inventory data. Brent crude fell by US47c or 0.4% to US$109.52 a barrel with US Nymex down by US6 cents to US$104.35 a barrel. 

Base metal prices were lower by up to 1.8% on the London Metal Exchange on Tuesday with tin leading the declines. But copper went against the trend, rising by 0.3%. The Comex gold futures quote rose by US$6.20 an ounce or 0.5% to US$1,260.10 per ounce. Iron ore fell by US70c a tonne or 0.7% on Tuesday to US$93.60 a tonne. 

Ahead: In Australia, consumer confidence data is released. In the US, the monthly Federal Budget and weekly mortgage data are issued.

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