Australian Stock Market Report - Morning
US industrial output rose 0.4pct in November - marking its biggest gain since July and ahead of expectations. However the October result was revised downward from a flat result to down 0.2pct. Capacity use rose to from 74.9 to 75.2 in November.
US consumer prices rose by a less than expected 0.1pct in November. Energy prices recorded the smallest increase in five months. The rise in food prices was also muted up just 0.2pct in November. Core CPI ticked up 0.1pct after being flat for three straight months. US net overall capital inflows fell from $80.1 billion to $7.5 billion in October, as foreigners cut their purchases of US securities. However China raised its US government debt holdings by $23.3 billion to $906.8 billion - an 11 month high.
European shares eased for the first time in eight sessions on Wednesday. Moody´s confirmed that they were reviewing Spain´s Aa1 credit rating, though it did say that it did not expect that Spain will need an EU bailout. Banking stocks led the declines with Barclays losing 3.7pct. The FTSEurofirst index lost 0.4pct, with the UK FTSE and the German Dax lower by 0.2pct.
US sharemarkets fell in late trade on Wednesday. The upbeat industrial production data supported equities in early trade, but the rally in the greenback and euro zone debt concerns pressured markets. With an hour of trade, the Dow Jones was lower by 9pts or 0.1pct with the S&P 500 down 0.4pct and the Nasdaq lower by 10pts or 0.4pct.
US treasuries were mixed on Wednesday. The recent slide in prices tempted buyers but gains were restrained on expectations of an improving economy. US 2yr yields fell by 2pts to 0.65pct and US 10yr yields gained 3pts to 3.52pct.
The US dollar rallied against major currencies on Wednesday following Moody´s comments on Spain. The Euro fell from highs near US$1.3375 to US$1.3210, ending US trade near US$1.3215. The Aussie dollar fell from lows near US99.55c to US98.40c, and was near US98.45c in late US trade. And the Japanese yen eased from around 83.65 yen per US dollar to near JPY84.35, and was around JPY84.45 in late US trade.
US crude oil prices recorded modest gains on Wednesday. The latest EIA weekly inventory report showed that US crude stockpiles fell by 9.9 million barrels - the biggest weekly drawdown in eight years. The Nymex crude oil contract rose by US34c or 0.4pct to US$88.62 a barrel.
Base metal prices were mostly lower on the London Metal Exchange. Nickel bucked the trend rising 0.2pct, while other metals fell between 0.9-1.8pct. The gold price fell on the back of the strengthening US dollar. Comex gold futures lost US$18.10 an ounce to US$1,386.20.
Ahead: In Australia, September quarter financial accounts and the RBA bulletin are released. In the US, housing starts, current account balance and the Philadelphia Fed index are released.
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