Australian Stock Market Report – Morning 12/10/13

US MID SESSION MORNING REPORT
(6.50am AEDT)

In US economic news, the employment trends index rose from 113.64 to 115.21 in November.

St Louis Federal Reserve president James Bullard has added to speculation about a near-term tapering, or winding back of monetary stimulus. Bullard said that ´´one reaction to that (recent economic data) would be to say ´how about if we have a small taper at the upcoming meeting?´´.

European shares edged slightly higher on Monday with investors encouraged by Chinese economic data. The FTSEurofirst 300 index rose by 0.2%, with the German Dax up by 0.3% and the UK FTSE lifted 0.1%. Mining shares eased despite higher base metal and iron ore prices. In UK trade, shares in BHP Billiton fell by 0.1% while Rio Tinto lost 0.4%.

US sharemarkets rose modestly on Monday as investors weighed Chinese economic data and comments from Federal Reserve officials. Shares in McDonalds lost 1.2% after reporting weaker global sales. With just over an hour to go, the Dow Jones was up by 20 points or 0.1%, with the S&P 500 up by 0.2% and the Nasdaq was up by 4pts or 0.1%.

US long-dated treasuries were little-changed on Monday in the absence of key economic data. Traders focussed on commentary coming from various Federal Reserve presidents, attempting to glean information about a possible tapering of monetary stimulus. US 2yr yields were flat at 0.306% while US 10yr yields fell by less than a point to 2.85%.

The US dollar was mixed against major currencies in European and US trade on Monday. The Euro lifted from lows near US$1.3695 to US$1.3740, and was trading around US$1.3740 in afternoon New York trade. The Aussie dollar fell from highs near US91.05c to US90.70c, and was around US91.00c in afternoon US trade. And the Japanese yen eased from 102.93 yen per US dollar to JPY103.31 and was near JPY103.21 in afternoon US trade.

World oil prices fell on Monday. Brent crude fell the most in response to well supplied markets as traders sought to reduced the differential with the US Nymex crude price. Reuters reports that TransCanada Corp has begun filling its 700,000 barrel-per-day oil pipeline that will transport crude from the Cushing, Oklahoma, storage hub to Gulf Coast refiners. Brent crude fell by US$2.22 or 2.0% to US$109.39 a barrel while US Nymex crude fell by US31c or 0.3% to US$97.34 a barrel.

Base metal prices rose up to 1.4% on the London Metal Exchange on Monday with nickel and zinc leading the way while copper rose only 0.2%. The Comex gold futures price rose by US$5.20 or 0.4% on Monday to US$1,234.20 per ounce. The iron ore price rose by 20c on Monday to US$139.40 a tonne.

Ahead: In Australia, the NAB business survey is released together with housing finance data. In China, data on production, retail sales and investment are released at 4.30pm AEDT. In the US, weekly chain store sales data is issued.

[Kick off your trading day with our newsletter]