Australian Stock Market Report

MORNING MARKET UPDATE
(8.00am AEDT)

In Eurozone economic news, industrial production fell by 0.5pct in September, but annual growth accelerated to 1.1pct.

European shares fell on Wednesday, touching a three-week low in intraday trade. Uncertainty over the outlook for central bank stimulus prompted investors to lock in recent profits. Late in the European session Atlanta Fed President Dennis Lockhart said a cut in the US Fed´s bond-buying program remained a possibility at the December Fed meeting, earlier than what markets had been expecting. The FTSEurofirst 300 index fell by 0.6pct, the UK FTSE lost 1.4pct and the German Dax lost 0.2pct. In UK trade, shares in BHP Billiton fell by 1.9pct while Rio Tinto lost 2.2pct.

US sharemarkets rose on Wednesday with the S&P 500 advance led by stronger-than-expected quarterly sales from Macy´s. The department store operator said promotions had increased sales and business was improving ahead of the holidays. Macy´s share rose 9.7pct with the S&P Consumer Discretionary Sector Index lifting by 1.1pct. Overall volume was still subdued as investors looked ahead to Fed Reserve´s Vice Chair Janet Yellen´s appearance on Thursday before the Senate Banking committee to consider her nomination as Fed Chair. At the close of trade, the Dow Jones was up by 71 points or 0.5pct with the S&P 500 up by 0.8pct and the Nasdaq was up by 46pts or 1.2pct.

US treasuries rose on Wednesday (yields lower) as investors prepared for new bond supply. Federal Treasury was set to auction $24 billion in 10-year notes. US 2yr yields fell by 2pts to 0.31pct and US 10yr yields fell by 4pts to 2.73pct.

Major currencies were mixed against the greenback in European and US trade on Tuesday. The Euro rose from early lows near US$1.3390 to around US$1.3465, and was near US$1.3460 in afternoon US trade. The Aussie dollar rose from lows near US92.80c to US93.25c, and was holding near US93.25c in afternoon US trade. And the Japanese yen held between 99.60 yen per US dollar and JPY99.25, and was holding near JPY99.40 in afternoon US trade.

World oil prices rose on Wednesday as support from Libyan supply outages offset forecasts for an increase in US stockpiles. The Brent crude price rose by US$1.35 or 1.3pct to US$107.16 a barrel, US Nymex crude rose by US84c or 0.9pct to US$93.88 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Tin and nickel managed to eke out modest gains. However copper fell to its lowest levels in three months after the US Fed officials raised the prospect of an earlier than expected tapering of stimulus. Gold fell again on Wednesday after comments by Federal Reserve officials showed the US central bank was getting closer to winding back stimulus. The Comex December futures gold price was down by US$2.80 or 0.2pct to US$1,268.40 per ounce. The iron ore price rose by US20c to US$136.10 a tonne.

Ahead: In Australia, no economic data is released. In the US, the trade balance is released and Fed Chair nominee Janet Yellen is set to give testimony to the Senate Banking Committee.

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