Australian Stock Market Report – Morning 11/22/13

MORNING REPORT
(8am AEDT)

In US economic news, new claims for unemployment insurance fell from 344,000 to 323,000 in the latest week, below forecasts for a result near 335,000. Producer prices fell 0.2pct in October, in line with forecasts. Excluding food and energy, prices rose by 0.2pct, ahead of forecasts for a 0.1pct gain. The Philadelphia Federal Reserve index eased from 19.8 to 6.5 in November. And the Markit flash manufacturing gauge rose from 51.8 to 54.3 in November.

The US Senate Banking Committee has voted 14-8 to approve the nomination of Janet Yellen as Federal Reserve Chair. The Senate committee now sends the nomination to the full Senate for a vote.

European shares were flat on Thursday as investors debated the timing of a wind-back of monetary stimulus in the US. The FTSEurofirst 300 index fell by 0.1pct, the UK FTSE was largely unchanged and the German Dax eased by 0.1pct. Markets in Spain and Italy advanced up to 0.6pct. In UK trade, shares in BHP Billiton fell by 1.4pct while Rio Tinto lost 1.6pct.

US sharemarkets rose on Thursday as investors focussed on the positive aspects of stronger US data for revenue and profits rather than the fear that the Federal Reserve will start winding back stimulus. At the close of trade, the Dow Jones was up by 109 points or 0.7pct, closing above 16,000 points for the first time. The S&P 500 was up by 0.8pct and the Nasdaq was higher by almost 48pts or 1.2pct.

US long-term treasuries lifted slightly on Thursday (yields lower) as bargain hunters stepped in, although buying was tempered by relatively strong economic data readings. US 2yr yields fell 1pt to 0.27pct while US 10yr yields were down 2pts to 2.79pct.

The US dollar was mixed against major currencies in European and US trade. The Euro rose from lows near US$1.3400 to around US$1.3475, and was holding near US$1.3470 in afternoon US trade. The Aussie dollar fell from highs near US93.10c to US92.10c, and was holding near US92.20c in afternoon US trade. And the Japanese yen eased from near 100.37 yen per US dollar to JPY101.15, and was near the weakest levels in afternoon US trade.

World oil prices posted solid gains on Thursday in response to positive economic data. Traders and investors are of the view that a stronger US job market will lead to higher gasoline demand. Brent crude rose by US$2.11 or 2.0pct to US$110.08 a barrel while US Nymex crude lifted by US$1.59 or 1.7pct to US$95.44 a barrel.

Base metal prices were mixed on the London Metal Exchange on Thursday. Lead and nickel fell up to 0.7pct while other metals rose up to 0.6pct. Gold futures fell to fresh four-month lows on Thursday with the Comex December futures gold price down by US$14.40 or 1.1pct to US$1,243.60 per ounce. The iron ore price fell by US10c to US$136.30 a tonne.

Ahead: In Australia, the State Accounts for 2012/13 are released. In the US, the Kansas City Fed index is released.

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