Australian Stock Market Report – Morning 11/6/13

US MORNING REPORT
(7.05am AEDT)

In US economic news, the ISM services index rose from 54.4 to 55.4 in October, ahead of forecasts centred on a reading near 54.0. The employment component rose from 52.7 to 56.2. And weekly chain store sales, as monitored by Redbook, were up 3.8pct on a year ago, ahead of the 3.6pct gain in the previous week.

In European economic news, the UK services sector gauge rose from 60.3 to 62.5 in October - the highest reading in over 16 years (May 1997). The European Commission predicts the 18-nation euro zone economy to grow by 1.1pct in 2014 after contracting 0.4pct this year.

European shares eased from five-year highs on Tuesday as shares of car-makers and insurers weakened in response to worse-than-expected corporate earnings figures. The FTSEurofirst 300 index fell by 0.2pct while the German Dax and the UK FTSE both loss 0.3pct. Mining shares rose in London trade with BHP Billiton up by 1.1pct while Rio Tinto shares rose by 1.2pct.

US sharemarkets fell sharply at the open of trade but clawed its way back over the session as investors digested corporate earnings data and better-than-expected economic data. With an hour of trade to go, the Dow Jones was down by 3 points or less than 0.1pct after being down 117pts in early trade. The S&P 500 was down by 0.1pct while the Nasdaq was higher by 7pts or 0.2pct.

US longer-term treasury yields fell on Tuesday (yields higher), in response to better-than-expected economic data. US Treasury will release its quarterly refunding announcement on Wednesday. US 2yr yields fell by 1pt to 0.305pct but US 10yr yields were up by 5pts to 2.66pct.

The US dollar drifted against major currencies in European and US trade on Tuesday. The Euro eased from highs near US$1.3510 to around US$1.3450 and was near US$1.3475 in afternoon US trade. The Aussie dollar lifted from near US94.65c to around US95.35c in European trade but eased to near US94.90c in afternoon US trade. And the Japanese yen weakened from near 98.18 yen per US dollar to JPY98.63, holding near JPY98.58 in afternoon US trade.

World oil prices fell on Tuesday with markets well supplied with crude. Brent crude fell by US90c or 0.8pct to US$105.33 a barrel. Nymex lost US$1.25 or 1.3pct to a four-month low of US$93.37 a barrel.

Base metal prices were little-changed on the London Metal Exchange on Tuesday, rising or falling by up to 0.3pct. But tin bucked the trend, up by 1.2pct. Gold fell modestly on Tuesday with the Comex December futures gold price down by US$6.60 or 0.5pct to US$1,308.10 per ounce. The iron ore price lifted again on Tuesday, rising by US$1.00 a tonne or 0.7pct to US$136.80 a tonne

Ahead: In Australia, international trade data is released. Commonwealth Bank releases its first quarter trading update. In the US, the leading index, weekly mortgage data and the Challenger job layoff series are released.

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