Australian Stock Market Report 05/12/2011
The US trade deficit widened to a larger than expected $48.2 billion in March. US exports grew by 4.6pct to a record $172.7 billion in March - marking the biggest month-on-month gain in 17-years. Imports grew by 4.9pct to $220.8 billion, largely driven by a sharp rise in the oil price. The average price for imported oil was US$93.76 per barrel - the highest level since late 2008.
European shares rallied on Wednesday, boosted by upbeat corporate earnings. French luxury retailer Hermes rose 3.3pct after first-quarter sales beat forecasts. However gains were capped by speculation that Greece may need to restructure its debt. The FTSEurofirst index rose by 0.3pct with the German Dax was lower by 0.1pct and the UK FTSE fell 0.7pct.
[Sign up here to get this report delivered to your inbox daily]
US sharemarkets fell for the first time in four sessions on Wednesday. The threat of a slowing Chinese economy and rising inflation resulted in a sell-off of the commodity complex driving mining and energy stock lower. The S&P500 energy index fell 2.9pct. However the retail sector record modest gains after Macy´s (up 7.7pct) reported a better than forecast profit and offered an upbeat outlook. The CBOE volatility index - also known as the ´´fear gauge´´ - rose by 6.5pct. The Dow Jones index fell by 130pts or 1pct with the S&P 500 lower by 1.1pct and the Nasdaq was closed down 27pts or 0.9pct.
US treasury prices rallied (yields lower) as investors shifted back to safe-haven investments. The auction of $24 billion in 10yr notes was met with solid demand. US 2yr yields fell by 4pts to 0.549pct and US 10yr yields eased by 6pts to 3.156pct.
[Sign up here to get this report delivered to your inbox daily]
The US dollar rallied against major currencies on Wednesday, with the Euro falling to a three-week low . Euro zone sovereign debt issues continued to dominate market activity. The Euro fell from highs near US$1.4420 to US$1.4170, ending US trade near $US1.4205. The Aussie dollar fell from highs near US108.85c to around US106.65c, closing us trade near US106.95c. And the Japanese yen eased from around 80.60 yen per US dollar to JPY81.30, closing US trade JPY81.00.
US and European crude oil prices fell on Wednesday. The latest EIA report confirmed a larger than expected build in crude stockpiles. US crude inventory levels rose by 3.78 million barrels last week against expectations for a 1.4 million build. The Nymex crude oil contract fell by US$4.25 or 4.1pct to US$99.63 a barrel. London Brent crude fell by US$5.06 to US$112.57 a barrel.
Base metal prices were weaker on the London Metal Exchange on Wednesday pressured by the slowdown emanating from China. Copper led the falls down 2.3pct, while other metals fell between 0.6pct and 1.8pct. And the gold price gave up early gains offset by a strengthening US dollar. Comex gold futures fell by US$15.50 an ounce or 1.0ct to US$1,501.40.
Ahead: In Australia, credit card data and labour market figures are released. In the US, business inventories, retail sales, and producer prices are released.
More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here