Australian Stock Market: Morning Report

US housing starts rose by bigger-than-expected 3.6pct in June, propelled by a 14.4pct rise in single-family home starts - the biggest jump in single-family home starts in over 4 years. US building permits, rose by 8.7pct in June against expectations of a 1.9pct rise marking the fourth consecutive rise in the index. Overall the data was a further indicator that the US housing sector was showing early signs of stabilisation and reinforces our view that the worst of the declines are over. US sharemarkets extended its rally on Friday as better than expected economic data buoyed housing related stocks. The strong US reporting season continued to provided investors with a reason to bid stocks higher. Bank of America reported a profit of 33c per share against analyst expectations of 28c. Citigroup surprised the market reporting a profit of 49c per share against expectations of a loss of 37c. The US Dow Jones rose by 32 points or 0.4pct with the S&P 500 ended unchanged and the Nasdaq gained 2points or 0.1pct. All three major indices closed out their best week in four months with the Dow Jones rising by 7.3pct, the S&P 500 gained 7pct recovering almost all that it lost in the previous four weeks, while the Nasdaq climbed 7.4pct. US treasuries slumped on Friday (yields higher) as investors moved away from safe haven bonds and into equities. Speculation that CIT Group may be able to avoid bankruptcy also weighed on government debt. US 10yr yields rose by 9pts to 3.66pct while US 2yr yields remained unchanged at 0.99pct. Over the week US 10yr yields rose by 35pts with US 2yr yields fell by 1pt. The US dollar fell against major currencies as the better than expected US earnings results continued to see investors take on more riskier positions. The Euro rallied from lows near US$1.4065 to around US$1.4145, ending US trade near US$1.4095. The Aussie dollar gained from lows near US79.70c to US80.35c, ending the US session at US80.15c. And the Japanese yen fell from highs near 93.605 yen per US dollar to lows near JPY94.35 ending US trade near its lows. Crude oil prices rallied for a fifth straight day on Friday supported by rising equity markets and a weaker US dollar. The August Nymex contract rose by US$1.54 or 2.5pct to US$63.56 a barrel and gained 6.1pct over the week. London Brent crude rose by US$1.63 to US$65.38 a barrel. Base metal prices were mostly higher on the London Metal Exchange as the weaker US dollar improved the purchasing of Asian and European investors. Aluminium rose 3.4pct with zinc up 4.7pct. And the price of gold followed the oil price higher. The August Comex quote rose by US$2.10 an ounce to US$937.50 Ahead: In Australia, producer price data is released. In the US the leading indicator is released. source:ibtimes.com.au