Australian Stock Market Report – Morning 4/11/2012

MORNING REPORT
(7am AEST)

US wholesale inventories rose by 0.9pct to $478.9 billion in February. The surge in inventories was largely driven by a rise in petroleum inventories which gained 3.9pct - the biggest increase in a year. US ICSC chain store sales rose by 4.1pct last week compared with a year ago. Same store sales are expected to rise between 3-4pct in April.

European shares fell to 12-week lows on Tuesday, as fresh concerns about global growth hurt blue chip shares. Ongoing European debt problems prompted investors to sell out of the banking sector, with Italian banks leading the declines after a rise in bond yields. The European banking index lost 4.2pct. The Chinese trade data which showed a drop in demand for raw materials resulted in mining stocks being hit hard. The STOXX Europe 600 Basic Resources Index lost 4.2pct. The benchmark FTSEurofirst 300 index fell by 2.5pct with the German Dax down 2.5pct. The UK FTSE lost 2.2pct.

US sharemarkets fell for the fifth straight session on Tuesday. The weak Chinese import data, ongoing European debt concerns and last week's poor US labour market data pressured stocks. At the close of trade, the Dow Jones was lower by 213pts or 1.7pct with the S&P 500 down by 1.7pct while the Nasdaq lost 56pts or 1.8pct.

US treasuries rallied on Tuesday (yields lower) as worries about global growth fuelled the bid for safe-haven assets. US 2yr yields fell 3pts to 0.29pct and US 10yr yields fell by 7pts to 1.98pct.

The Euro and commodity currencies fell in overnight trade, as risk aversion saw investors head back to the safety of the US dollar. The Euro fell from highs around to US$1.3135, to lows near US$1.3055 and was holding near US$1.3085 in last trade. The Aussie dollar fell from highs around US103.20c to US102.45c and was near its lows in late US trade. And the Japanese yen traded between 81.30 yen per US dollar to JPY80.65 and was near JPY80.70 in late US trade.

Benchmark crude oil prices fell on Tuesday as fears that a slowdown in global growth could dent energy demand. US Nymex crude fell by US$1.44 or 1.4pct to US$101.02 a barrel - a seven week low. While London Brent crude fell by US$2.79 to US$119.98 a barrel.

Base metal prices were weaker on the London Metals Exchange on Tuesday. Soft demand outlook weighed on commodities with the copper price (down 3.9pct) falling to a three-month low. And the gold price turned positive in the last hour of trade as it joined the ranks of safe-haven buying. April Comex gold price rose by US$16.80 or 1pct to US$1,660.70 an ounce.

Ahead: In Australia, the consumer confidence survey and housing finance data are released. In the US, data on export and import prices are released together with the Beige Book and monthly federal budget.

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