Australian Stock Market Report – Morning August 7, 2014

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By Craijg James, CommSec Chief Economist | August 7, 2014 8:59 AM EST

* In US economic data, the trade deficit narrowed by 7% to $41.5 billion in June. The smaller deficit was driven by a fall in petroleum imports to a 3 year low. Analysts had expected the trade deficit to widen.


Workers wearing uniforms are seen in front of a cargo vessel at the port in Ningbo, Zhejiang Province, May 13, 2014. China is increasing its support for its wobbly trade sector with a raft of new measures that include giving more tax breaks, credit insurance and currency hedging options to its exporters. Picture taken May 13, 2014. REUTERS/Stringer (CHINA - Tags: BUSINESS MARITIME)

* European shares fell on Wednesday in response to further tensions along the Russia Ukraine border. Economic data across the region was also weaker. Euro zone factory orders fell 10.4% driven by weakness in Europe's largest economy, Germany -where industrial orders fell by 3.2%, the biggest fall in almost 3 years.

Italian GDP fell by 0.2% unexpectedly pushing the economy back into recession. The FTSEurofirst 300 index fell by 0.8% with the German Dax down by 0.7% while the UK FTSE lost 0.7%. Italy's FTSE MIB lost 2.7%. Australia's major miners were higher in London trade with shares in BHP Billiton up 1.1% while Rio Tinto gained 1.2%.

* US sharemarkets ended mildly higher in a choppy trading session on Wednesday. Equities recovered from an initial sell-off, after finding technical support around the S&P 500's 100-day moving average. However modest gains were once again eroded in late trade. The S&P Telco sector led the weakness sliding 1.5%. 21st Century Fox rose 4.7% after pulling its $80 billion offer to buy Time Warner. Time Warner shares fell 12.3%. The Dow Jones index ended higher by 14 points or 0.1% with the S&P 500 index largely unchanged while the Nasdaq gained 2 points or 0.1%

* US treasury prices lifted on Wednesday (yields lower) as political tensions over Ukraine drove safe-haven demand. US 2 year yields fell by 2 points to 0.46% while US 10 year yields fell 1 point to 2.47%.

* The Euro and commodity currencies eased in early European trade before recovering late in the US session on Wednesday. The Euro touched early lows near US$1.3335 before lifting to highs around US$1.3385, and ending US trade near US$1.3380. The Aussie dollar fell to early lows near US92.95c before lifting to highs near US93.65c, ending the US session near US93.45c. And the Japanese yen strengthened from 102.60 yen per US dollar to JPY101.85, ending US trade near JPY102.05.

* World oil prices were mixed on Wednesday. Brent lifted from a nine-month low amid concerns over conflict in Ukraine, while ample supply in the US kept the Nymex price under pressure. Brent crude rose by US19 cents or 0.2% to US$104.80 a barrel and the US Nymex price fell by US46 cents to US$86.92 a barrel.

* Base metal prices were mixed on Wednesday with Copper falling 1.2% to a five-week low, driven by a stronger US dollar. Similarly Zinc also lost 1.2% However Nickel bucked the trend lifting by 1.7%. Gold prices rose on Wednesday supported by safe-haven buying Comex gold futures quote rose by US$22.90 or 1.8% to US$1,308.20 per ounce. Iron ore rose by US40c on Wednesday or 0.4% to US$95.90 a tonne.

Ahead: In Australia, employment data is scheduled. In the US, consumer credit is released.

(Photo: / )
Workers wearing uniforms are seen in front of a cargo vessel at the port in Ningbo, Zhejiang Province, May 13, 2014. China is increasing its support for its wobbly trade sector with a raft of new measures that include giving more tax breaks, credit insurance and currency hedging options to its exporters. Picture taken May 13, 2014. REUTERS/Stringer (CHINA - Tags: BUSINESS MARITIME)
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