Australian Stock Market Report - Morning
The US trade deficit narrowed from US$44.6bn to US$38.7bn in October and was below expectations for a US$44.5bn shortfall. US consumer sentiment lifted from 71.6 to 74.2 in December and above expectations for a result near 72.5.
China´s inflation rate lifted from 4.4pct to 5.1pct in November, driven by higher food costs. Non-food inflation stood at just 1.9pct. Ahead of the release of Chinese economic data, the Peoples Bank raised bank reserve requirements for the third time in a month.
European shares rose on Friday in response to encouraging US economic data, closing at the highest levels since late September 2008. The FTSEurofirst index rose by 0.1pct, with the UK FTSE higher by 0.1pct while the German Dax rose by 0.6pct.
US sharemarkets rose in response to good economic and corporate news. Shares in General Electric rose 3pct after it said it would lift its quarterly dividend. The Dow Jones rose by 40pts or 0.4pct with the S&P 500 higher by 0.6pct and the Nasdaq was up 20.9pts or 0.8pct. Over the week the Dow rose by 0.3pct while the S&P 500 was up 1.3pct and the Nasdaq finished higher by 1.8pct.
US treasuries fell on Friday (yields higher). US 2yr yields rose by 1.7pts to 0.644pct and US 10yr yields rose 11.5pts to 3.323pct. Over the week Treasuries posted the biggest gain in yields since August 2009 with US 2yr yields up by 17pts and US 10yr yields higher by 32pts.
Major currencies weakened in US trade on Friday in response to better-than-expected US economic data. The Euro eased from highs near US$1.3280 to US$1.3180, ending US trade near US$1.3225. The Aussie dollar eased from highs near US98.95c to US98.35c, before ending US trade near US98.45c. And the Japanese yen weakened from near 83.45 yen per US dollar to near JPY84.00, ending US trade near JPY83.85.
US crude oil prices eased on Friday in response to a stronger US dollar. And Saudi Arabia reiterated its commitment to an oil price between US70-80 a barrel at the OPEC meeting on Saturday. The Nymex crude oil contract fell by US58c or 0.7pct to US$89.19 a barrel. Oil fell by 1.6pct over the week.
Base metal prices were mixed on the London Metal Exchange on Friday. Nickel rose 1.6pct and copper rose by 0.5pct but other metals fell between 0.6-1.4pct. Over the week base metal prices posted solid gains of between 1.9pct and 3.8pct with copper and zinc doing best. But aluminium slipped 0.4pct over the week. The gold price fell on Friday in line with oil in response to a firmer greenback with the Comex gold futures price lower by US$7.90 an ounce to US$1,384.90. Gold fell by 1.5pct over the week.
Ahead: In Australia, credit and debit card data is released together with lending finance figures. The Reserve Bank Governor appears before the banking competition inquiry. In the US no major economic data is scheduled.
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