Australian Stock Market Report - Morning
The Chicago Fed National Activity Index improved from -0.52 to -0.28 in October. A zero value indicates the national economy is expanding at historical trends. The three-month moving average - a more consistent barometer - indicates growth was below its historical trend and suggest inflationary pressures are subdued over the coming year.
European shares fell on Monday as worries that other Euro zone countries will need to be bailed out like Ireland. Banking stocks led the declines. Ireland´s financial regulator, said that capital could be injected immediately and considering ´´overcapitalising´´ its banks to alleviate concerns about potential future losses. The FTSEurofirst index fell 0.7pct, the UK FTSE fell 0.9pctpct and the German Dax lost 0.3pct.
US sharemarkets fell on Monday. Financial stocks were amongst the hardest hit as speculation mounted that Federal authorities were looking to file a series of insider trading cases against hedge fund traders. The KBW banking index lost 1.7pct. Adding to the weakness was ongoing concerns about European debt issues. With an hour of trade, the Dow Jones was lower by 45pts, the S&P 500 lost 0.3pct and the Nasdaq rose by 7pts or 0.3pct.
US treasuries rallied (yields lower) on Monday as investors switched into safe haven assets on worries of a European contagion from Ireland´s banking issues. Treasuries also received a boost from the US Fed´s bond purchase program. The Fed has bought about $38 billion of treasuries in the past 10 sessions. US 2yr yields fell 4pts to 0.47pct and US 10yr yields fell 6pts to 2.81pct.
The Euro slumped against the US dollar as peripheral European debt worries saw investors head to the safety of the greenback. The Euro fell from highs near US$1.3780 to US$1.3580, heading into the US close near US$1.3610. The Aussie dollar fell from highs around US99.50c to US98.25c, heading into the US close near US98.65c. And the Japanese yen is currently around 83.25 yen per US dollar after trading from JPY83.50 to JPY83.20.
US crude oil prices fell on Monday. The stronger US dollar erased early gains as focus turned to the euro zone debt problems. The Nymex crude oil contract fell by US24 cents to US$81.74 a barrel.
Base metal prices fell on the London Metal Exchange after Chinese import data showed a surprising fall. Chinese implied demand for refined copper fell by 19.7pct in October following a 3.3pct rise in the prior month. Copper lost 1.4pct, aluminium gained 1.2pct, while other metals lost between 1.0pct-1.2pct. And the gold price recorded modest gains on Monday, with Comex gold futures up US$5.50 an ounce to US$1,357.80.
Ahead: In Australia, no economic data is released. In the US the existing home sales and the Richmond Fed index are released.
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