MORNING REPORT (5.15am AEST)
In US economic data, personal income rose by 0.3% in April, in line with forecasts. But consumption fell by 0.1%, short of forecasts tipping a 0.2% increase. The Chicago purchasing managers index rose from 63.0 to 65.5 in May, above the median forecast of 61.0. Consumer sentiment rose from 81.8 to 81.9 in May, short of the 82.5 median forecast.
The Chinese purchasing managers' index rose from 50.4 to 50.8 in May, above forecasts centred on a result near 50.6. Meanwhile the State Council said policymakers would ´´properly´´ cut the reserve requirement for banks that had extended a certain amount of loans to rural borrowers and smaller companies.
European shares were generally lower on Friday. The FTSEurofirst 300 index eased by 0.1%, and the UK FTSE lost 0.4% but the German Dax was up by less than 0.1%. Data showed German retail sales growing at the fastest annual rate in two years. Mining shares slumped in London trade in response to lower base metal and iron ore prices with shares in BHP Billiton down by 3.7% while Rio Tinto lost 4.1%.
US blue-chip shares ended slightly higher on Friday. The Dow Jones index rose by 18 points or 0.1% to record highs. The S&P 500 rose by 0.2% to fresh record highs but the Nasdaq lost 5 points or 0.1%. Over the month the Dow Jones rose by 0.8%, the S&P 500 lifted 2.1% and the Nasdaq rose by 3.1%.
US long-term treasury prices eased on Friday (yields higher). US 2 year yields were flat near 0.375% while US 10 year yields were up by 1 point to 2.475%. Over the week US 2 year yields rose by 2.5 points while US 10 year yields fell by almost 4 points.
Major currencies were mixed against the US dollar over European and US sessions. The Euro rose from lows near US$1.3600 to highs near US$1.3645, before ending US trade around US$1.3630. The Aussie dollar fell from highs near US93.25c to lows near US92.90c before finishing US trade around US93.10c. And the Japanese yen eased from 101.55 yen per US dollar to JPY101.83, before ending US trade near JPY101.78.
World oil prices fell in line with other commodities on Friday with traders attributing the falls to end-month profit-taking. Brent crude fell by US87c or 0.8% to US$109.41 a barrel while US Nymex fell by US87c or 0.8% to US$102.71 a barrel. Over the week Brent fell by 1.0% with Nymex down by 1.6%.
Base metal prices were lower by up to 1.2% on the London Metal Exchange on Friday, the exception being nickel, up 1.8%. Over the week metal prices fell by up to 2.6% although aluminium bucked the trend, up 1.7%. The Comex gold futures quote fell on Friday in response to end-month book squaring, hitting near 4-month lows, down by US$11.00 an ounce or 0.9% to US$1,246.00 per ounce. Gold fell 3.5% over the week. Iron ore fell by US$3.90 a tonne or 4.2% on Friday to US$91.80 a tonne. On the week iron ore fell 6.2%.
Ahead: In Australia, the RP Data-Rismark home price index is released with TD Securities inflation gauge, Business Indicators, and the Performance of Manufacturing index. In the US, the ISM manufacturing index is released with construction spending.
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