Australian Stock Market Report – Morning 11/21/13

US MID-SESSION REPORT
(7am AEDT)

In US economic news, advance retail sales rose by 0.4pct in October, ex autos, gas & building materials sales lifted by 0.5pct. Headline CPI inflation dipped 0.1pct in October to be up just 1.0pct over the year - the smallest rise in four years. Core CPI inflation held steady at 1.7pct over the year. Existing home sales fell by 3.2pct in October, weighed down by higher mortgage rates and tight supply. But the median price of a previously owned home was up 12.8pct on a year ago.

European shares were mixed on Wednesday as traders mulled reports suggesting that the ECB was considering a cut in the deposit rate from zero to minus 0.1pct. The FTSEurofirst 300 index rose by 0.1pct, the UK FTSE fell by 0.3pct and the German Dax lifted by 0.1pct. In UK trade, shares in BHP Billiton rose by 0.4pct while Rio Tinto gained 1.3pct.

US sharemarkets fell in late trade on Wednesday following the release of the Federal Reserve minutes from its last board meeting. According to the minutes, many Fed members felt if the economy warranted, it could decide to slow bond purchases at one of its next few meetings. It noted that many members were seeing downside risk to the economic outlook as having diminished. With an hour of trade left, the Dow Jones was down by 59 points or 0.4pct with the S&P 500 down by 0.3pct and the Nasdaq was lower by 7pts or 0.2pct.

US long-term treasuries fell on Wednesday (yields higher), after St. Louis Fed President Bullard commented that tapering of stimulus is ´´definitely on the table´´ and a solid November jobs report would increase the ´´probability for a December taper´´. US 2yr yields fell by 1pt to 0.27pct and US 10yr yields rose by 8pts to 2.78pct.

The US dollar rallied against the Euro and commodity currencies late in the US trading session on Wednesday, after the Fed minutes confirmed that members had discussed the possibility of tapering stimulus at the next few meetings. The Euro fell from highs near US$1.3550 to around US$1.3415, holding near US$1.3420 in afternoon US trade. The Aussie dollar fell from near US94.10c to US93.25c, holding near US93.30c in late trade. And the Japanese yen eased from near 99.80 yen per US dollar to JPY100.20, before ending US trade near JPY100.05.

World oil prices were mostly higher on Wednesday after a US official said it would be ´´very hard´´ to get a nuclear agreement with Iran this week. Brent crude rose by US$1.05 to US$107.97 a barrel while US Nymex crude which had been higher throughout the session eased after the Fed minutes, settling down by US1c to US$93.33 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Aluminium and Nickel fell by 0.7pct while copper lifted by 0.4pct. Gold futures fell to a four-month low on Wednesday with the Comex December futures gold price down by US$15.50 or 1.2pct to US$1,258.00 per ounce. The iron ore price rose by US10c on Wednesday to US$136.40 a tonne.

Ahead: In Australia, no major economic data is released. In the US, the Producer Price Index is released. RBA Governor Glenn Stevens is scheduled to speak at the ABE dinner in Sydney.

[Kick off your trading day with our newsletter]