Australian Stock Market Report – Morning 10/14/2011

vMORNING REPORT
(7am AEDT)

The US trade deficit narrowed marginally from $45.63 billion to $45.61 billion in August. US exports fell 0.1pct while imports were flat. The trade gap with China widened to a record $29 billion in August. US jobless claims fell by 1,000 to 404,000 in the past week. The four-week moving average of claims (considered a better measure of labour market trends) fell by 7,000 to 408,000.

European shares were lower on Thursday after weaker-than-expected Chinese trade data raised fresh concerns about the global economic outlook. In addition banks were among the top decliners after the ECB warned that any write-down on government debt that causes bondholder losses could damage the region´s banking system. The STOXX Europe 600 banking index fell 3.7pct. The FTSEurofirst index fell by 1.1pct, the UK FTSE lost 0.7pct and the German Dax fell 1.3pct.

US sharemarkets gave back recent gains on Thursday as earnings from JP Morgan and soft trade data out of China reinforced worries about a slowing global economy. JP Morgan was the biggest drag on the Dow losing 5.4pct after reporting a drop in third-quarter net profit, citing the European debt crisis for pushed investment banking clients to the sidelines. The Dow fell 41pts or 0.4pct, while the S&P 500 lost 0.3pct and the Nasdaq lifted by 15pts or 0.6pct.

US treasuries rallied on Thursday (yields lower) as concerns about Europe´s plans to recapitalize its banks saw investor shift to safe-haven assets. US 2yr yields fell by 1pt to 0.277pct while US 10yr yields fell by 3pts to 2.178pct.

The Euro recovered after early losses against the greenback in overnight trade. The Euro fell from highs near US$1.3820 to lows near US$1.3685 before recovering to close US trade around US$1.3790. The Aussie dollar fell from highs near US102.25c to US101.05c but recovered to trade near US102.05c in late US trade. And the Japanese yen traded between 77.20 yen per US dollar and JPY76.70, ending US trade near JPY76.90.

Global crude oil prices were lower on Thursday in a volatile trading session. Losses extended after the release of the EIA weekly inventory data. US crude stockpiles rose by a larger than expected 1.34 million barrels in the past week. Nymex crude oil fell by US$1.34 or 1.6pct to US$84.23 a barrel and London Brent crude fell by US25c to US$111.11 a barrel.

Base metal prices were lower on Thursday as the softness in Chinese trade data raised concerns about the slowing global economy. Metals fell between 1.1-4.4pct. The gold price fell in line with other metals with the Comex December gold price lower by US$14.10 an ounce to US$1,668.50.

Ahead: In Australia, no economic data is released. In the US, retail sales, business inventories, and the University of Michigan confidence figures are expected.

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