Australian Stock Market Report – Morning August 29, 2014

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By Craig James, CommSec Chief Economist | August 29, 2014 9:49 AM EST

* In US economic data, the economy grew at a 4.2% annual pace in the June quarter, up from the "flash" estimate of 4% and above forecasts of 3.9%. New claims for unemployment insurance fell by 1,000 to 298,000 in the latest week and below forecasts of a result near 300,000. And pending home sales rose by 3.3% in July, above forecasts for a 0.5% gain.


A trader works by the post where Verizon is traded on the floor of the New York Stock Exchange in this file photo taken February 21, 2014. Verizon Communications Inc, the largest U.S. wireless telecoms company, reported a 6 percent rise in quarterly revenue as its postpaid wireless subscriber additions rose 53 percent, July 22, 2014. REUTERS/Brendan McDermid/Files (UNITED STATES - Tags: BUSINESS)

* European shares fell on Thursday on fears of an escalation in the Russia-Ukraine crisis. NATO said well over 1,000 Russian troops were operating inside Ukraine. The FTSEurofirst 300 index fell by 0.6% with the German Dax down by 1.1% while the UK FTSE lost 0.4%. Australia's major miners were also lower in London trade with shares in BHP Billiton down by 2.8% while Rio Tinto lost 3.8%.

* US sharemarkets recovered from lows over Thursday's session. Tensions between Russia and Ukraine rattled investors early in the session but then investors chose to focus on positive economic data. The Dow Jones index fell by 42 points or 0.3% after being down 96 points in early trade. The broader S&P 500 index fell by 0.2% while the Nasdaq fell by 12 points or 0.3%.

* US treasury prices were firmer (yields lower) in thin trade on Thursday. The tensions between Russia and Ukraine kept investors close to safe-haven assets like government bonds and gold. But balanced against this was stronger-than-expected US economic data. US Treasury sold $29 billion in seven-year notes on Thursday. US 2 year yields fell by 1 point to 0.504% while US 10 year yields were down by 2 points at 2.336%.

* Major currencies generally range-traded against the US dollar over the European and US sessions on Thursday. The Euro fell from highs near US$1.3220 to around US$1.3160, before ending US trade near US$1.3180. The Aussie dollar eased from highs near US93.70c to lows near US93.40c before ending the US session close to US93.50c. And the Japanese yen held between 103.55 yen per US dollar and JPY103.82, ending US trade near JPY103.69.

* World oil prices were mixed on Thursday. While there are ample global supplies of crude, traders are closely watching the tensions between Russia and Ukraine. Brent crude fell by US26c or 0.3% to US$102.46 a barrel with the US Nymex price up by US67c a barrel to US$94.55 a barrel.

* Base metal prices fell on Thursday up to 1.1% with nickel leading the declines. But tin edged 0.1% higher. Gold prices rose on Thursday in response to geopolitical tensions with the Comex gold futures quote up by US$7.00 or 0.5% to US$1,290.40 per ounce. Iron ore fell by US90c or 1.0% on Thursday to US$87.30 a tonne.

Ahead: In Australia, private sector credit data is due. In the US, personal income and spending are released with consumer sentiment.

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(Photo: / )
A trader works by the post where Verizon is traded on the floor of the New York Stock Exchange in this file photo taken February 21, 2014. Verizon Communications Inc, the largest U.S. wireless telecoms company, reported a 6 percent rise in quarterly revenue as its postpaid wireless subscriber additions rose 53 percent, July 22, 2014. REUTERS/Brendan McDermid/Files (UNITED STATES - Tags: BUSINESS)
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