Australian Stock Market Report – Morning 11/20/13

US MID SESSION MORNING MARKET UPDATE
(7.00am AEDT)

The OECD cut its global growth forecasts for this year and next as emerging-market economies including India and Brazil cool. The world economy was expected to expand by 2.7pct this year and 3.6pct next year, instead of the 3.1pct and 4pct predicted in May. Australian economy growth was expected at a sub-trend pace of 2.5pct and 2.6pct in 2013 and 2014 respectively.

People Bank Of China Governor Xiaochuan commented late yesterday setting out very general plans, albeit without any particular details or timeframe other than to state that PBOC hopes changes will be implemented by 2020. The PBOC will basically end normal intervention in the currency markets, will widen the daily trading band to increase flexibility of the Yuan. Deposit interest rate caps will be raised slowly and eventually removed to liberalise markets.

European shares fell in thin trade on Tuesday as the negative markets comments from US billionaire investor Carl Icahn drew attention to a mixed earnings season. The FTSEurofirst 300 index fell by 0.7pct, the UK FTSE and the German Dax both lost 0.4pct. In UK trade, shares in BHP Billiton fell by 0.6pct while Rio Tinto lost 0.2pct.

US sharemarkets eased on Tuesday, giving back early gains. The Dow Jones broke above the key 16,000 level before easing back as investors waited on further clues from the Federal Reserve. Fed Chairman Bernanke is due to speak after the close of the US session. Home Depot rose 1.1pct after raising its fiscal year outlook for the third time this year. With an hour of trade left, the Dow Jones was down by 5 points or 0.1pct with the S&P 500 down by 0.2pct and the Nasdaq was lower by 17pts or 0.4pct.

US treasuries fell on Tuesday (yields higher), as investors waited on the plethora of data to be released on Wednesday including retail sales and inflation. US 2yr yields were flat at 0.29pct and US 10yr yields rose by 4pts to 2.71pct.

The US dollar fell against the Euro in European and US trade on Tuesday after China announced plans to make the Yuan more flexible. The Euro rose from early lows near US$1.3490 to around US$1.3545, holding near US$1.3530 in afternoon US trade. The Aussie dollar rose from near US93.80c to US94.45c, holding near US94.15c in late trade. And the Japanese yen eased from near 99.65 yen per US dollar to JPY100.25, before ending US trade near JPY100.20.

World oil prices were generally weaker on Tuesday ahead of fresh talks between Iran and the West. Brent crude fell by US$1.55 to US$106.92 a barrel while US Nymex crude touched a four-month low, but closed up by US31c to US$93.34 a barrel.

Base metal prices were higher on the London Metal Exchange on Tuesday, rising between 0.2-0.7pct. Gold futures recorded a modest gain on Tuesday with the Comex December futures gold price up by US$1.20 or 0.1pct to US$1,273.50 per ounce. The iron ore price fell by US70c on Tuesday to US$136.30 a tonne.

Ahead: In Australia, no major economic data are released. In the US, existing home sales, retail sales, CPI, and FOMC minutes are scheduled for release.

[Kick off your trading day with our newsletter]