Australian Stock Market Report – Morning 12/11/13

US MORNING REPORT
(8am AEDT)

In US economic news, weekly chain store sales were up by 2.6% in the latest week on a year ago according to Redbook, down from 4.9% in the previous week. And wholesale sales rose 1.0% in October with inventories up 1.4%.

In Chinese economic news, retail sales rose 13.7% in the year to November, ahead of forecasts for a 13.3% gain. And production rose 10.0% on a year ago, just short of the 10.1% forecast.

European shares fell on Tuesday. Some investors blamed the falls on weakness in the Swiss bourse after a stronger Swiss franc raised concerns about exports from the country. The Swiss SMI lost 1.1pct. The FTSEurofirst 300 index fell 0.7% with the UK FTSE down 0.6% and German Dax was down 0.9%. Mining shares were weaker with BHP Billiton shares falling 2.0% in London trade while Rio Tinto lost 1.0%.

US sharemarkets eased modestly on Tuesday. Investors were hopeful of a budget deal in Congress, while debate continued over the timing of the Federal Reserve ´taper´. At the close of trade, the Dow Jones was lower by 52 points or 0.3%, with the S&P 500 down by 0.3% and the Nasdaq was lower by 8pts or 0.2%.

US long-dated treasuries rose on Tuesday (yields lower). Traders bought bonds ahead of a $30 billion auction of three-year government securities. And traders continue to debate when the Federal Reserve would start to wind back monetary stimulus. Federal Treasury will auction $21 billion of 10-year notes on Wednesday and $13 billion of 30-year bonds on Thursday. US 2yr yields were flat at 0.302 while US 10yr yields fell by 4 points to 2.80%.

The US dollar fell against major currencies in European and US trade on Tuesday. The Euro lifted from lows near US$1.3740 to US$1.3790, and was trading around US$1.3765 in afternoon New York trade. The Aussie dollar rose from lows near US90.80c to around US91.70c, and was around US91.60c in afternoon US trade. And the Japanese yen rose from 103.38 yen per US dollar to JPY102.64 and was near JPY102.70 in afternoon US trade.

World oil prices were mixed on Tuesday. Brent fell on expectations of a end to a blockade of Libyan oil terminals. But the Nymex price rose as traders continue to focus on narrowing the differential with Brent. Brent crude fell by US1c to US$109.38 a barrel while US Nymex crude rose by US$1.17 or 1.2% to US$98.51 a barrel.

Base metal prices generally rose by up to 1.7% on the London Metal Exchange on Tuesday with zinc leading the way. But tin lost 3.5% while nickel fell 0.2%. Gold rose on bargain hunting, prompted by a weaker greenback. The Comex gold futures price rose by US$26.90 or 2.2% on Tuesday to US$1,261.10 per ounce. The iron ore price was unchanged at US$139.40 a tonne.

Ahead: In Australia, consumer confidence data is released. In the US, the weekly mortgage market index and monthly federal budget data is issued.

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