MORNING REPORT (6.05am AEST)
In US economic data, producer prices rose by 0.6% in April, the largest increase in 18 months. Prices were up 2.1% over the year to April. Food prices surged by 2.7% in April pushed up by higher meat prices, which recorded their largest increase in 11 years. Producer prices excluding volatile food and energy costs increased by 0.5% in April to be up 1.9% over the year.
European shares were mostly flat on Wednesday following the recent rally. The media sector was under pressure after disappointing earnings results by broadcasters ITV (down 11.9%) and Mediaset. The STOXX Europe 600 media index fell 1.3%. Portuguese stocks fell to three-month lows led by banking stocks after reports of a need to increase capital. The FTSEurofirst 300 index was unchanged with the German Dax also ending flat while the UK FTSE rose by 0.1%. And mining shares were higher. Shares in BHP Billiton were up by 1.5% while Rio Tinto rose by 1.3%.
US sharemarkets extended losses throughout the session on Wednesday as the small caps sector resumed their recent sell-off. The Russel 2000 index of small-cap index fell by 1.4%. IBM shares fell 1.7% after saying it expects hardware profit to be flat in 2014. The S&P retail index fell 1% after Macy (down 0.5%) missed sales expectations. The Dow Jones index fell by 102 points or 0.6%. The S&P 500 was down by 0.5%. The Nasdaq lost 30 points or 0.7%.
US long-term treasury prices rose on Wednesday (yields lower) as expectations the ECB will cut interest rates sparked a global fixed-income. US 2 year yields fell by 3 points to 0.37% while US 10 year yields were down by 7 points to 2.54%.
Major currencies were mixed against the US dollar on Wednesday. The Euro fell from highs near US$1.3725 to lows near US$1.3700, before ending US trade around US$1.3710. The Aussie dollar fell from highs near US94.10c to lows near US93.65c before finishing US trade around US93.80c. And the Japanese yen held between 102.15 yen per US dollar and JPY101.75, before ending US trade near JPY101.85.
World oil prices rose on Wednesday supported by a drawdown on US stockpiles and the ongoing tension in Ukraine. Brent crude rose by US90c or 0.8% to US$110.14 a barrel while US Nymex rose by US67c or 0.8% to US$102.37 a barrel.
Base metal prices were mostly higher on the London Metal Exchange on Wednesday with the exception of Nickel (down 4.7%). Zinc lifted by 2.2% while other metals were up 0.3-1.7%. The Comex gold futures quote fell for the first time in three sessions, down US$11.10 an ounce to US$1,294.80 per ounce. Iron ore was unchanged at US$103.50 a tonne
Ahead: In Australia the ABS releases seasonally adjusted vehicle sales figures. RBA Head of financial stability Luci Ellis speaks at the CITI Residential Housing Conference in Sydney. In the US, data on consumer prices, industrial production and the New York Empire manufacturing survey are released.
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