Australian Stock Market Report – Morning 11/8/13

MORNING MARKET UPDATE
(8.00am AEDT)

In US economic news, the advance reading of economic growth in the September quarter was 2.8pct, above forecasts for 2.0pct annualised growth. New claims for unemployment insurance (jobless claims) fell in the latest week by 9,000 to 336,000, close to forecasts.

The European Central Bank surprisingly cut its key refinancing rate from 0.50 per cent to a record low of 0.25 per cent.

European shares eased from 5-year highs in heavy, volatile trade on Thursday. The ECB rate cut was balanced against funding concerns for smaller banks. The FTSEurofirst 300 index was flat but while the German Dax rose by 0.4pct, the UK FTSE lost 0.7pct. Mining shares fell in London trade with BHP Billiton down by 0.7pct while Rio Tinto shares lost 0.9pct.

US sharemarkets eased on Thursday after investors fretted that stronger-than-expected economic growth could prompt the Federal Reserve to trim monetary stimulus. Shares in Twitter debuted at $45.10 a share, above the $26 listing price. Shares ended at $44.90 after hitting highs of $50.09. At the close of trade, the Dow Jones fell by 153 points or 1.0pct with the S&P 500 down by 1.3pct and the Nasdaq was lower by 74.6pts or 1.9pct.

US longer-term treasuries rose on Thursday (yields lower). Traders responded to the surprise rate cut in Europe while many also saw underlying weakness in the US economic growth result as it was driven in part by higher inventories. US 2yr yields fell by 1pt to 0.286pct and US 10yr yields fell by 4pts to 2.605pct.

Major currencies were mixed against the greenback in European and US trade on Thursday. The Euro slumped from highs US$1.3530 to around US$1.3300 but was back near US$1.3415 in afternoon US trade. The Aussie dollar held between US94.40c and US95.05c and was near US94.45c in afternoon US trade. And the Japanese yen eased from near 98.57 yen per US dollar to JPY99.39, but retraced to JPY97.96 in afternoon US trade.

The US oil price fell on Thursday as the US dollar rose. As commodities are generally priced in US dollars, a stronger greenback reduces the purchasing power of buyers outside the US. The Brent crude price fell by US$1.78 or 1.7pct to US$103.46 a barrel, US Nymex crude fell by US60c or 0.6pct to US$94.20 a barrel.

Base metal prices were generally lower by 0.4-0.8pct on the London Metal Exchange on Thursday. But copper rose 0.5pct while aluminium edged 0.1pct higher. Gold fell on Thursday as the greenback rose with the Comex December futures gold price down by US$9.30 or 0.7pct to US$1,308.50 per ounce. The iron ore price fell by US20c a tonne or 0.1pct to US$136.90 a tonne

Ahead: In Australia, the Statement on Monetary Policy is released. In China, trade data is released and other key economic data is released on Saturday. In the US, the non-farm payrolls (employment) data is released.

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