Australian Stock Market Report – Morning 11/18/13

MORNING MARKET UPDATE
(5.35am AEDT)

In US economic news, industrial production fell by 0.1pct in October, short of forecasts for a gain of 0.2pct. The Empire State manufacturing index fell from +1.52 to minus 2.21 in November.

China has announced bold economic and social reforms including the easing of the one child policy and market pricing of fuels and electricity while also promising to speed up further financial liberalisation.

European shares rose on Friday on expectations that the US Federal Reserve won´t start winding back stimulus until the new year. But traders watched developments in Greece after the country´s finance minister rejected fresh austerity measures. The FTSEurofirst 300 index rose by 0.3pct, the UK FTSE lifted by 0.4pct and the German Dax edged 0.2pct higher. In UK trade, shares in BHP Billiton rose by 1.0pct while Rio Tinto gained 0.8pct.

US sharemarkets rose again on Friday with the Dow Jones and S&P 500 at record highs. Investors were encouraged by comments from Federal Reserve Chair nominee, Janet Yellen, that monetary policy will remain accommodative. At the close of trade, the Dow Jones was up by 85 points or 0.5pct with the S&P 500 up by 0.4pct and the Nasdaq was up by 13pts or 0.3pct. Over the week, the Dow Jones rose by 1.3pct with the S&P 500 up by 1.6pct and the Nasdaq climbed by 1.7pct.

US treasuries were little-changed on Friday. While economic data was soft, investors moved funds into equities, encouraged that monetary stimulus was unlikely to be wound back in the short term. US 2yr yields fell by 1pt to 0.294pct and US 10yr yields rose by 1pt to 2.70pct. Over the week US 2yr yields fell by 3pts and US 10yr yields fell by 6pts.

The US dollar eased against the Euro and commodity prices in European and US trade on Friday. The Euro rose from early lows near US$1.3430 to around US$1.3505, ending US trade near US$1.3495. The Aussie dollar eased from near US93.35c to US93.10c, but recovered to near US93.75c, ending US trade near its highs. And the Japanese yen eased from near 99.95 yen per US dollar to JPY100.42, before ending US trade near JPY100.15.

World oil prices rose slightly on Friday. Continued Libyan supply outages were balanced by expectations that a deal may be close on the Iranian nuclear program. The Brent crude rose by US22c to US$108.50 a barrel while US Nymex crude rose by US9c to US$93.84 a barrel. Brent rose by 3.2pct over the week while Nymex fell by 0.8pct.

Base metal prices rose up to 1.3pct on the London Metal Exchange on Friday with nickel doing best. Over the week metals were lower up to 2.3pct although tin bucked the trend, up 0.8pct. Gold rose modestly on Friday with the Comex December futures gold price up by US$1.10 or 0.1pct to US$1,287.40 per ounce. Gold fell 1.3pct on the week. The iron ore price rose by US20c on Friday to US$136.80 a tonne and was up by US90c on the week.

Ahead: In Australia, no major economic data is released. In the US, various Federal Reserve presidents deliver speeches and capital flows data is released.

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