MORNING REPORT (6.05am AEST)
In US economic data, consumer prices rose by 0.3% in May. Food prices lifted for the fourth consecutive months, coupled with a lift in gasoline prices. Prices were up 2% over the year. Excluding volatile food and energy, cosnumer prices increased by 0.2% in April to be up 1.8% over the year. US initial jobless claims fell by 24,000 to 297,000 - a seven year low. US industrial production fell 0.6% after lifting by 0.9% in March.
European shares fell on Thursday after news that the Portuguese and Italian economies contracted in the March quarter. The Euro zone economy grew by just 0.2% in the first three months of the year, lagging analyst´s forecasts for a 0.4% expansion. Germany continued to be the stalwart growing by a better than expected 0.8%, driven by domestic demand. Inventory and public spending were the only factors that kept the French economy from contracting, with a flat result. Italy´s FTSE MIB index fell by 3.6% while Portugal´s PSI-20 lost 2.7%. The FTSEurofirst 300 index fell by 0.8% with the German Dax down 1% while the UK FTSE fell by 0.6%. And mining shares were weaker. Shares in BHP Billiton were down by 0.7% while Rio Tinto fell by 0.1%.
US sharemarkets extended losses on Thursday as the small caps sector continued to sell-off on heavy volume. The Russel 2000 index of small-cap stocks fell by 0.7%. Wal-Mart shares fell 2.4% after reporting second-quarter profit below analyst estimates. The volatility gauge lifted by 9.2%. The Dow Jones index fell by 167 points or 1%. The S&P 500 was down by 0.9%. The Nasdaq lost 31 points or 0.8%.
US treasury prices rose on Thursday (yields lower) after Greek bonds weakened and sparked safety buying of US debt. Volumes were heavy. US 2 year yields fell by 2 points to 0.36% while US 10 year yields were down by 5 points to 2.50%.
Major currencies were mixed against the US dollar on Thursday. The Euro was volatile falling to lows near US$1.3650 before lifting to highs near US$1.3730, and ending US trade around US$1.3710. The Aussie dollar fell from highs near US93.90c to lows near US93.30c before finishing US trade around US93.55c. And the Japanese yen held between 102.10 yen per US dollar and JPY101.35, before ending US trade near JPY101.60.
World oil prices were mixed on Thursday with Brent holding on to gains ahead of contract expiry. US crude stockpiles rose 947,000 barrels in the past week, against analyst expectations of a 100,000 barrel decrease. Brent crude rose by US29c or 0.3% to US$110.43 a barrel while US Nymex fell by US87c or 0.8% to US$101.50 a barrel.
Base metal prices were weaker on the London Metal Exchange on Thursday. Nickel was the worst performer down 6.4% while other metals were down 0.2-2.1%. The Comex gold futures quote fell for the second straight session, down US$1.20 an ounce to US$1,293.60 per ounce. Iron ore fell by US70c to US$102.80 a tonne.
Ahead: In Australia, no economic data is released. In the US, data on housing starts and building permits are released.
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