Australian Stock Market Report – Morning 10/31/13

MORNING REPORT
(7.05am AEDT)

In US economic news, consumer prices rose by 0.2pct in September with the core rate up 0.1pct, below forecasts for a 0.2pct gain. The ADP employment index shows that 130,000 private sector jobs were created in October, below forecasts of a 150,000 gain.

The Federal Reserve left the federal funds rate target between zero and 0.25 per cent. The Fed will maintain monthly purchases of $40 billion of mortgaged-backed securities and $45 billion of Treasury securities. The Fed says the economy is growing at a moderate pace,

European shares were largely flat ahead of the US Federal Reserve decision. The FTSEurofirst 300 index ended flat after being up 0.6pct earlier in the session to 5-year highs. The German Dax fell by 0.1pct and the UK FTSE rose by 3pts or less than 0.1pct. Mining shares edged higher in London trade with BHP Billiton and Rio Tinto both up 0.2pct.

US sharemarkets fell on Wednesday as investors booked profits on recent gains following no surprises from the Federal Reserve meeting. Economic data was also benign. The Dow Jones fell by 61 points or 0.4pct after holding in a 147 point range over the session. The S&P 500 ended lower by 0.5pct while the Nasdaq lost 21pts or 0.6pct.

US longer-term treasury yields eased modestly (yields higher) on Wednesday after traders reacted to tame economic data and the Federal Reserve decision. US Treasury sold $29 billion in seven-year notes on Wednesday. US 2yr yields fell by 1pt to 0.313pct and US 10yr yields were up 3pts to 2.536pct.

The US dollar gyrated against major currencies following the Federal Reserve decision but emerged generally firmer. The Euro held in a range from US$1.3695 and US$1.3780 over European and US trade before ending US trade around US$1.3735. The Aussie dollar held between US94.40c and US95.15c, ending US trade near US94.75c. And the Japanese yen held between 98.06 yen per US dollar and JPY98.65, ending US trade near JPY98.60.

World oil prices were mixed on Wednesday. Brent crude was supported by the continued disruption to Libyan oil exports. Brent rose by US85c or 0.8pct to US$109.86 a barrel. But US Nymex fell in response to a bigger-than-expected 4.1 billion lift in US crude oil inventories in the latest week. Nymex fell by US$1.43 or 1.5pct to US$96.77 a barrel.

Base metal prices rose up to 1.2pct on the London Metals Exchange on Wednesday with copper leading the way. The exception was tin, down 0.2pct. Gold also rose modestly ahead of the Federal Reserve meeting with the Comex December futures gold price up by US$3.80 or 0.3pct to US$1,349.30 per ounce. The iron ore price fell by US10c to US$131.20 a tonne.

Ahead: In Australia, data on private sector credit and building approvals are released. NAB releases earnings results. In the US, weekly data on claims for unemployment insurance is released with the Chicago purchasing managers index.

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