Australian Stock Market Report - Morning
The US Federal Reserve Beige Book has reported sluggish economic conditions in late September/early October. ´´Businesses continued to postpone capital spending plans because of economic and public policy uncertainties´´. In addition the Fed noted: ´´Hiring remained limited, with many firms reluctant to add to permanent payrolls given economic softness.´´
The UK Government has unveiled significant austerity measures including raising the retirement age, cutting public service jobs by 490,000 with welfare spending cuts to save 7 billion pounds a year.
European shares rebounded on Wednesday as mining shares rose in response to higher metal prices. In London trade shares in BHP Billiton rose 2.5pct with Rio Tinto up 2.7pct. The FTSEurofirst index rose by 0.3pct with the UK FTSE up 0.4pct and the German Dax gained 0.5pct.
US sharemarkets rebounded on Wednesday. Investors took time to digest Tuesday´s surprise rate hike in China while profit results continued to beat expectations. Shares in Delta Airlines rose 11pct after its earnings result, dragging other airline stocks sharply higher. And shares in Boeing rose 4pct. The Dow Jones rose by 129pts or 1.2pct with the S&P 500 up 1.1pct and the Nasdaq lifted 20pts or 0.8pct.
US treasuries were mixed on Wednesday. The Beige Book reinforced expectations that there would be more monetary stimulus but firmer equity markets capped gains in the bond market. US 2yr yields fell by 2pts to 0.351pct, and US 10yr yields were steady at 2.48pct.
Major currencies rose against the greenback in European and US trade as investors again embraced growth-dependent assets like shares and commodities. The Euro rose from lows near US$1.3755 to US$1.3985, ending US trade near US$1.3950. The Aussie dollar lifted from lows around US97.35c to almost US98.90c, ending US trade near US98.65c. And the Japanese yen rose from 81.40 yen per US dollar to JPY80.90, ending US trade near JPY81.15.
US crude oil prices rebounded on Wednesday as the US dollar eased and equity markets recovered from Tuesday´s losses. The strike action at France´s largest oil port has extended to 24 days. The Nymex crude oil contract rose by US$2.28 or 2.9pct to US$81.77 a barrel.
Base metal prices rebounded on the London Metal Exchange on Wednesday as investors digested Tuesday´s rate hike in China. Metals rose between 0.3-2.1pct. And the gold price also recovered with the Comex gold futures price higher by US$8.40 an ounce or 0.6pct to US$1,344.40.
Ahead: In Australia, Wesfarmers releases quarterly sales and TEN Network releases profit data. In China, GDP, and monthly economic data are released. In the US the leading index, Philadelphia Fed survey and weekly jobless claims are released.
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