Australian Stock Market Report - Morning 10/31/2011

MORNING REPORT (7am AEDT)

Qantas planes are expected to be flying by mid afternoon.

The final reading for US consumer sentiment in October came in at 60.9, up from 59.4 in September and above forecasts centred near 58.0. Personal income rose by just 0.1pct in September but spending rose by 0.6pct - in line with forecasts.

China has replaced its banking and securities regulators. Shang Fulin replaces Liu Mingkang as China's banking regulator.

European shares closed mixed on Friday as investors digested the Euro summit agreement. The FTSEurofirst index fell by 0.2pct with the French CAC down 0.6pct, the UK FTSE lower by 0.2pct but the German Dax was higher by 0.1pct. European shares rose by 4.1pct over the week - the fifth straight week of gains.

US blue chip shares rose modestly on Friday with trading ranges narrower than seen in recent times. The Dow Jones closed higher for the fifth session, lifting 22pts or 0.2pct with the S&P 500 up 0.5pts or less than 0.1pct but the Nasdaq lost 1.5pts or 0.1pct. Over the week the Dow Jones rose by 3.6pct, the S&P 500 rose by 3.7pct and the Nasdaq lifted by 3.8pct.

US longer-term treasuries rose on Friday (yields lower) as bargain hunters moved in after Thursday´s sell-off. Yields hit the highest levels in 2-1/2 months on Thursday. Crimping the gains was another batch of encouraging economic data. US 2yr yields fell by 3pts to 0.29pct and US 10yr yields fell by 8pts to 2.32pct. Over the week US 2yr yields rose by 2pts while US 10yr yields rose by 10pts.

Major currencies were mixed over US and European sessions on Friday as investors squared positions after an eventful week. The Euro traded between US$1.4135 and US$1.4200 and ended US trade near US$1.4145. The Aussie dollar rose from lows around US106.55c to US107.30c, and ended US trade at US107.00c. And the Japanese yen traded between 76.65 yen and JPY75.95, ending US trade near JPY75.80.

Crude oil prices fell on Friday as investors booked profits after hefty gains recorded over the week. Nymex crude oil fell by US64c or 0.7pct to US$93.32 a barrel and London Brent crude fell by US$2.17 or 1.9pct to US$109.91 a barrel. Over the week Nymex crude rose by 6.8pct while Brent rose US35c or 0.3pct.

Base metal prices were mixed on the London Metals Exchange on Friday as investors assessed the Euro summit agreement while others chose to book profits. Nickel fell 1.0pct and aluminium lost 0.6pct but other metals rose with lead up 2.6pct. Over the week base metals posted strong gains with copper up 14.5pct, zinc up 10.2pct and lead up 9.5pct. Gold fell on Friday in line with other commodities with the Comex December gold price down by US50c an ounce to US$1,747.70. Over the week gold soared by 6.8pct.

Ahead: In Australia, private sector credit, the RP Data home value index and the monthly inflation gauge are released. In the US, the Chicago purchasing managers index is released.

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