MORNING REPORT
(7am AEDT)

US consumer prices rose by 0.3pct in September, underpinned by food and energy prices. But the core rate - excludes food and energy - rose by 0.1pct, to stand 2.0pct higher than a year ago. And housing starts soared by 15pct to a 658,000 annual rate in September, above forecasts for a result near 590,000 and the highest level since April 2010. Building permits were lower by 5pct to 594,000, below consensus estimates.

According to the Federal Reserve Beige Book the US economy recorded modest growth in September. Some districts noted improvement in construction and consumer spending rose slightly.

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European shares rose on Wednesday on hopes that European leaders will come up with a plan this weekend to deal with the region´s debt crisis. Banking shares did best with shares in BNP Paribas up 6.2pct. The FTSEurofirst index rose by 0.6pct, with the UK FTSE up 0.7pct, while the German Dax was higher by 0.6pct.

US sharemarkets eased on Wednesday. Economic data was mixed while lower-than-expected earnings from Apple weighed on technology stocks. The Dow Jones fell by 72pts or 0.6pct, while the S&P 500 was lower by 1.3pct and the Nasdaq lost 53pts or 2.0pct.

US long-dated treasuries rose on Wednesday (yields lower) as US equities and commodities fell in response to a downbeat Beige Book report on the economy. US 2yr yields fell 1pt to 0.27pct while US 10yr yields fell by 3pts to 2.16pct.

The Euro and commodity currencies eased against the greenback over the US session from highs set in European trade. The Euro fell from early highs of US$1.3865 to lows around US$1.3735 and ended US trade near US$1.3750. The Aussie dollar eased from highs around US103.20c to lows around US102.00c, and ended US trade near US102.20c. And the Japanese yen traded between 76.65 yen per US dollar and JPY76.85, ending US trade near JPY76.80.

Global crude oil prices eased on Wednesday as investors became cautious about prospects for a solution to the European debt crisis and therefore about the outlook for the global economy. But supporting prices was data showing that US crude oil stocks fell sharply last week while crude imports hit a 10-month low. Nymex crude oil fell by US$2.23 or 2.5pct to US$86.11 a barrel while Brent crude fell by US$2.76 to US$108.39 a barrel.

Base metal prices fell between 1.1-3.2pct on Wednesday as investors weighed up a credit rating downgrade for Spain and softer Chinese economic data. And gold also fell in line with other commodities with the Comex December gold price lower by US$5.80 an ounce to US$1,647.00.

Ahead: In Australia, Reserve Bank assistant governor Malcolm Edey delivers a speech and detailed labour market figures are released. In the US, existing home sales, the leading index, Philadelphia Fed index and weekly jobless claims data are released.

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