Morning Report 6:05 AEST)
St. Louis Federal Reserve President James Bullard warned that the Fed could fall behind the curve if the US unemployment rate drops faster than expected. In response to questions after his speech Bullard commented that at the current 6.3% unemployment rate, the US is ´´way ahead of schedule´´ on its trajectory toward a normal labour market. Bullard does not have a vote on the Fed´s policy-setting committee this year.
In US economic data, consumer spending rose by a less than expected 0.2% in May after a flat result in April, prompting economists to downgrade estimates for second quarter growth. US jobless claims fell by 2,000 to 312,000 last week.
European shares ended mildly weaker on Thursday driven by a fall in banking shares. UK homebuilders helped offset some of the losses after Bank of England Governor Mark Carney announced a cap on home loans and tougher checks but would not look to curb house price growth directly. The FTSEurofirst 300 index lost 0.1%, the German Dax lost by 0.6% while the UK FTSE eased ended flat. Australia´s major miners finished mixed in London trade with shares in BHP Billiton flat while Rio Tinto rose by 1.2%.
US sharemarkets eased on Thursday as St. Louis Fed President Bullard indicated rate hikes could come earlier than expected. Financial stocks were amongst the biggest decliners after New York State Attorney General filed a securities fraud lawsuit against Barclays (down 6.3%) for giving unfair advantage to high its US frequency traders. UBS lost 2.5% and Credit Suisse fell 3.4%. The Dow Jones lost by 21 points or 0.1% with the S&P 500 index down by 0.1% and the Nasdaq was largely flat.
US long-term treasury prices were higher (yields fell) as traders response to the possibility of a slowing US economy. US 2 year yields fell by 2 points to 0.47% while US 10 year yields fell by 3 points to 2.53%.
Major currencies were mixed against the US dollar on Thursday. The Euro fell from highs near U$1.3640 to lows near US$1.3580, closing US trade at US$1.3605. The Aussie dollar traded in a tight range from lows near US94.00c to highs near US94.15c and ended US trade around session highs. And the Japanese yen lifted from 101.80 yen per US dollar to JPY101.50, ending US trade near JPY101.70.
World oil prices fell on Thursday as fears eased over exports disruptions from OPEC´s second largest producer Iraq. Brent crude fell by US91c or 0.8% to US$113.09 a barrel as supply fears receded. While the US Nymex price closed lower by US66c or 0.6% to US$105.84 a barrel.
Base metal prices were mixed on the London Metal Exchange on Thursday. Nickel soared by 1.3% but other metals rose up to 0.7% while tin lost 0.3% and aluminium lost 0.2%. The Comex gold futures quote fell by US$5.60 an ounce or 0.4% to US$1,317 per ounce. Iron ore rose by just US$1.60 a tonne or 1.7% to US$95.30 a tonne.
Ahead: In Australia, no economic data is released. In the US, the University of Michigan confidence index is released.
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