Australian Stock Market Report
US consumer confidence fell from 54.3 to 50.4 in July, just below forecasts centred on a result near 51.0. The Richmond Fed manufacturing index eased from +23 to +16 in July with shipments down from +31 to +22. The S&P/Case Shiller 20-city house price index rose 0.5pct in seasonally adjusted terms in May (+1.3pct unadjusted) to be 4.6pct higher than a year ago.
The Reserve Bank of India lifted the repo rate as expected yesterday by 25 basis points to 5.75pct but it raised the reverse repo rate by a larger-than-expected 50bp to 4.50pct.
European shares rose to fresh five-week highs in response to good earnings results from Deutsche Bank and UBS. The FTSEurofirst index rose by 0.5pct, the UK FTSE rose by 0.3pct and the German Dax rose by 0.2pct.
The blue-chip US Dow Jones index rose for a fourth day with good earnings data offsetting mixed economic readings. Shares in chemical giant DuPont rose by 3.6pct after posting good earnings and revenue results and raising earnings guidance. The Dow Jones rose by 12 points or 0.1pct but the S&P 500 eased 0.1pct, and the Nasdaq lost 8 points or 0.4pct.
US treasuries fell on Tuesday (yields higher). Traders took their guidance from higher home prices, rather than consumer confidence, believing that it reduced the risk of a double-dip recession. US 2yr yields rose by 4pts to 0.64pct and US 10yr yields lifted by 6pts to near 3.05pct.
The US dollar clawed back some of its recent losses against major currencies on Tuesday. The Euro held between US$1.2950 and US$1.3045, before ending US trade at US$1.2990. The Aussie dollar eased from highs around US90.65c to US90.00c, ending US trade near US90.20c. And the Japanese yen eased from near 86.90 yen per US dollar to JPY87.90, ending US trade near its weakest levels.
US crude oil prices fell by almost 2pct on Tuesday after a lower reading for consumer confidence raised doubts about future oil demand. Prices were also pressured by technical factors after oil failed to hold levels near US$80 a barrel. The Nymex crude oil contract fell by US$1.48 or 1.9pct to US$77.50 a barrel while London Brent crude fell by US$1.37 to US$76.13 a barrel.
Base metal prices generally fell by between 1.2-2.3pct on the London Metal Exchange on Tuesday with most weakness occurring after the latest US consumer confidence data. Aluminium held up best, being largely flat on the day. But the Comex gold price fell for a third day to three-month lows as the price fell below the key 100 day moving average. Comex gold fell by US$25.10 an ounce to US$1,158.00. The range was US$1,156.90-1,186.50.
Ahead: In Australia, the Consumer Price Index is released. Alesco releases earnings results. In the US data on durable goods orders is released.