Australian Stock Market Report – Morning 12/21/2012

MORNING REPORT
(8am AEDT)

The Conference Board leading index eased by 0.2pct as expected. Hurricane Sandy had an influence on the result. US September quarter GDP expanded by 3.1pct, up from the 2.7pct reported last month. US jobless claims rose by 17,000 to 361,000 last week.

The US Philadelphia Fed business activity index rose from minus 10.7 to +8.1 in November. Across the subindices employment and new orders recorded healthy gains. The result was better than expected. US existing home sales climbed by 5.9pct to a seasonally adjusted 5.04 million units - the fastest pace in three years.

European shares were mixed on Thursday as investors paused after the recent buying spree. The mixed messages from US Congress added to uncertainty. The benchmark FTSEurofirst 300 index rose 0.1pct while the UK FTSE fell 0.1pct and the German Dax gained 0.1pct. Miners were mixed with Rio Tinto down 0.3pct in London trade and BHP Billiton rose 0.2pct.

US sharemarkets edged higher in light volumes on Thursday. Republican House Speaker Boehner pledged to keep working on a solution to the ´´fiscal cliff´´ while still criticising President Obama´s approach to budget talks. With just over an hour of trade the Dow Jones was up 60pts or 0.5pct with the S&P 500 higher by 0.6pct and the Nasdaq rose 6pts or 0.2pct.

US treasuries rose on Thursday (yields lower) as investors held onto safe-haven assets ahead of the year-end fiscal deadline. US 2yr yields fell by 2pts to 0.274pct while US 10yr yields fell 1pt to 1.797pct.

The Euro gave back early gains against the US dollar, as US budget concerns outweighed upbeat economic data. The Euro lifted from US$1.3210 to highs of US$1.3290, before easing to near US$1.3240 at the close of US trade. The Aussie dollar touched highs near US104.99c before falling to lows around US104.60c and held near US104.80c in late US trade. And the Japanese yen eased from 83.88 yen per US dollar to JPY84.45 and was near JPY84.40 at the close of US trade.

World crude oil prices inched higher in choppy trade on Thursday. Favourable economic data that showed the US economy grew faster than expected was offset by the deadlock in US budget talks. Brent crude rose by US5c or 0.1pct to US$110.41 and Nymex crude rose by US15c or 0.2pct to US$90.31 a barrel.

Base metal prices were weaker on the London Metals Exchange on Thursday. Copper fell to a near one-month low, down 2pct, as the stalled US ´´fiscal cliff´´ talks added to longer-term US growth concerns. The gold price fell for the third consecutive session on Thursday. Comex gold futures closed down $21.80 to US$1,645.90 per ounce. And the spot iron ore price held steady at US$135.50 a tonne.

Ahead: In Australia, no economic data is released. In the US, the University of Michigan confidence figures and personal income/spending data are released.

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