Australian Stock Market - Morning 10/3/2011
US wholesale inventories rose by 1.1pct in January to $436.88 billion the highest level since November 2008. US wholesale sales jumped by 3.4pct - the largest gain since November 2009. Given the upward revisions to the December reading on wholesale inventories, it is likely that fourth-quarter GDP growth will be revised up from 2.8pct to around 3.2pct.
European shares fell in a choppy trading session on Wednesday. Fresh violence in Libya pushed oil prices higher and fuelled economic growth fears. Miners were among the biggest losers as key base metals fell. The STOXX Europe 600 Basic Materials index fell 1.1pct. Banking stocks also came under pressure on renewed fears about the debt situation in peripheral European economies. Overall the FTSEurofirst index fell 0.2pct, the German Dax lost 0.5pct and the UK FTSE gave back 0.6pct.
US sharemarkets were mixed on Wednesday. Broker upgrades for IBM (up 2.4pct) supported the Dow Jones, however the broader market continued to come under pressure given the fresh violence in Libya. With an hour of trade, the Dow Jones was higher by 21pts or 0.0pct. The S&P 500 fell by 0.1pct and the Nasdaq was lower by 9pts or 0.3pct.
US treasuries rallied on Wednesday (yields lower). European debt concerns added to the demand for US bonds. Portugal´s borrowing costs soared as speculation grew that the country will not be able to avoid a international bailout. US 2yr yields fell 3pts to 0.69pct and US 10yr yields fell by 8pts to 3.47pct.
The Euro was little changed against the US dollar as concerns about the debt situation in peripheral euro zone countries offset expectations of a near term rate hike by the ECB. The Euro rose from lows near US$1.3860, to around US$1.3940, and headed into the US close near US$1.3900. The Aussie dollar rallied from lows of US100.65c to US101.25c, heading into to the US close near US101.05c. And the Japanese yen strengthened from 82.95 yen per US dollar to around JPY82.60, heading into the US close near JPY82.70.
US crude oil prices settled lower on Wednesday after the latest round of inventory data. The US EIA said total crude inventories rose by 2.52 million barrels last week - well ahead of expectations. However given the intensified fighting in Libya losses were limited. The Nymex crude oil contract fell by US64c or 0.6pct to US$104.38 a barrel. And the London Brent crude rose by US$2.71 to US$115.77 a barrel.
Base metal prices fell on the London Metal Exchange on Wednesday as the sustained increase in the price of brent crude added to concerns about global growth prospects. And the gold price recorded modest gains as safe-haven assets remained in demand. The Comex gold futures price closed up US$2.40 an ounce at US$1,49.60.
Ahead: In Australia, employment data is released. In the US, trade figures are released.
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