Australian Stock Market Report – Morning 10/28/13

MORNING REPORT
(7.05am AEDT)

In US economic news, orders for durable goods (goods with a life more than three years) rose by 3.7pct in September, ahead of expectations. But non-defence goods excluding planes fell by 1.1pct. Consumer sentiment fell from 77.5 to a 10-month low of 73.2 in October, below expectations for a result near 75.0. And wholesale inventories rose by 0.5pct in September with sales up 0.6pct - both above expectations.

European shares were largely flat on Friday. The FTSEurofirst 300 index eased by 0.1pct but the UK FTSE and German Dax rose by 0.1pct. Mining shares in London were mixed with BHP Billiton up 0.2pct while Rio Tinto shares eased by 0.4pct.

US sharemarkets rose on Friday with the S&P 500 at fresh record highs. Shares in Amazon rose 9.4pct while Microsoft gained 6pct on favourable reaction to earnings results. The Dow Jones rose by 61pts or 0.4pct with the S&P 500 up by 0.4pct while the Nasdaq rose by 14pts or 0.4pct. Over the week the Dow Jones rose by 1.1pct, the S&P 500 rose by 0.9pct while the Nasdaq rose by 0.7pct.

US treasury yields rose modestly on Friday (yields lower) as latest economic data confirmed in the minds of many investors that the Federal Reserve will take its time in making a decision to wind back economic stimulus. US Treasury will sell $96 billion in new coupon-bearing supply next week, including $32 billion in two-year notes on Monday, $35 billion in five-year notes on Tuesday and $29 billion in seven-year notes on Wednesday. US 2yr yields fell by 2pts to 0.30pct and US 10yr yields fell by 1pt to 2.51pct. Over the week US 2yr yields fell by 2pts while US 10yr yields fell by 10pts.

The US dollar lifted modestly against major currencies in European and US trade on Friday. The Euro eased from highs near US$1.3830 to around US$1.3775 before ending US trade around US$1.3805. The Aussie dollar eased from near US96.20c to around US95.70c, ending US trade near US95.80c. And the Japanese yen eased from near 96.95 yen per US dollar to JPY97.48, ending US trade near JPY97.40.

World oil prices were mixed on Friday. Brent crude fell by US6c to US$106.93 a barrel while US Nymex lifted by US74c or 0.8pct to US$97.85 a barrel. Brent fell on news that Scotland´s Grangemouth refinery will remain open. And Nymex rose according to Reuters on expectations that ´´increasing refinery operations and a major new Midwest pipeline will slow the rise in inventories.´´ Over the week Brent lost 2.7pct while Nymex lost 2.9pct.

Base metal prices were generally higher by between 1.1-1.6pct on the London Metals Exchange on Friday. But copper rose by just 0.3pct and nickel fell 0.5pct. Over the week prices rose up to 2.7pct (nickel) but copper fell 0.6pct. The Comex December futures gold price was up by US$2.20 or 0.2pct on Friday to US$1,352.40 per ounce and rose by US$37.80 or 2.9pct over the week. The iron ore price fell by 20c to US$133.30 a tonne on Friday and lost US$1.10 over the week.

Ahead: In Australia, no major economic data is released. In the US, pending home sales and industrial production data are released.

[Kick off your trading day with our newsletter]