Australian Stock Market Report – Morning 10/29/13

MORNING REPORT
(7.05am AEDT)

In US economic news, industrial production rose by 0.6pct in September, above expectations for a gain of 0.4pct. But the pending home index fell by 5.6pct to 101.6, weaker than the 0.1pct expected gain.

European shares were again largely flat on Monday. The FTSEurofirst 300 index eased by 0.1pct, the German Dax also fell 0.1pct but the UK FTSE rose by 0.1pct. Mining shares in London were weaker with BHP Billiton down by 0.4pct while Rio Tinto shares lost 0.9pct. Volumes were down in the UK due to a major storm, disrupting transport.

US sharemarkets were little changed on Monday as traders digested earnings news and awaited the Federal Reserve meeting. Shares in housing stocks fell after pending home sales fell the most in more than three years. In terms of earnings, Reuters reports that of the 249 companies in the S&P 500 that have reported earnings so far, 69.1pct have beaten analysts´ expectations, above the 66pct beat rate for the past four quarters. The Dow Jones fell by 1.4 points or less than 0.1pct with the S&P 500 up by 2.3pts or 0.1pct while the Nasdaq fell by 3.2pts or 0.1pct.

US treasury yields were flat on Monday as traders awaited the Federal Reserve meeting. US Treasury sold $32 billion in two-year notes on Monday and will sell $35 billion in five-year notes on Tuesday and $29 billion in seven-year notes on Wednesday. US 2yr yields were steady near 0.31pct and US 10yr yields were up 1pt to 2.52pct.

The US dollar lifted modestly against major currencies in European and US trade on Monday. The Euro eased from highs near US$1.3815 to around US$1.3775 before ending US trade around US$1.3785. The Aussie dollar eased from near US96.20c to around US95.55c, ending US trade near US95.65c. And the Japanese yen eased from near 97.53 yen per US dollar to JPY97.78, ending US trade near JPY97.68.

World oil prices rose on Monday. Brent crude rose by US$2.68 or 2.5pct US$109.61 a barrel on reports that Libyan production had fallen after new protests over the weekend at its oil fields and ports. And US Nymex lifted by US83c or 0.8pct to US$98.68 a barrel in response to stronger-than-expected US industrial production figures. There is also a two-day meeting of experts from Iran and six world powers on Wednesday.

Base metal prices were generally higher by up to 0.7pct on the London Metals Exchange on Monday, except tin, down 0.1pct. The Comex December futures gold price fell for the first time in three days, down by US30c to US$1,352.20 per ounce. The iron ore price fell by $1.50 to US$131.80 a tonne on Monday.

Ahead: In Australia, the Reserve Bank Governor delivers comments at a conference. ANZ releases full year results. In the US, retail sales and producer price data are released. The Federal Reserve starts a two-day meeting.

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