Australian Stock Market Report – Morning November 18, 2014

Car manufacturing — A worker assembles a car at a Nissan's manufacturing plant in Rosslyn, outside Pretoria, September 11, 2009. Reuters/Siphiwe Sibeko

* In the US, industrial production fell by 0.1% in October, short of forecasts tipping a 0.2% gain. The New York Fed manufacturing index rose from +6.17 to +10.16 in November.

* European shares rose on Monday on supportive comments from the European Central Bank president. Mario Draghi said that the ECB was unanimous in its commitment to use unconventional measures such as bond buying to prevent deflation taking hold: "Other unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds." The FTSEurofirst 300 index rose by 0.5% with the UK FTSE up by 0.3% and the German Dax was up by 0.6%. In London trade shares in BHP Billiton and Rio Tinto both gained 0.6%.

* US sharemarkets were mixed again on Monday. Merger and acquisition activity was in focus. In the pharma sector Allergan agreed to be bought by Actavis in a deal worth up to US$65.5 billion. While in the oil services sector Halliburton said it would buy Baker Hughes for around US$35 billion. At the close of trade the Dow Jones was up by 13 points or 0.1%. The S&P 500 index was up by 0.1% to record highs but the Nasdaq was down by 17.5 points or 0.4%.

* US treasuries were mixed on Monday. Investors digested latest economic data from the US and Japan. And many were cautious of setting positions ahead of the release of minutes from the last Federal Reserve meeting. US 2 year yields fell by 2 points to 0.508% while US 10 year yields rose by 1 point to 2.338%.

* The US dollar rose against major currencies on Monday. The Euro fell from highs near US$1.2555 to lows near US$1.2445, and was around US$1.2455 in late US trade. The Aussie dollar fell from highs near US87.90c to around US86.95c, and was at US87.10c in late US trade. The Japanese yen eased from near 115.50 yen per US dollar to JPY116.53 and was at JPY116.47 in late US trade.

* World oil prices fell on Monday in response to a stronger US dollar. A firmer greenback reduces the purchasing power of European and Asian buyers of dollar-denominated commodities. News that Japan had gone back into recession also reduced investor interest in oil. Brent crude fell by US10c or 0.1% to US$79.31 a barrel while the US Nymex crude price fell by US18c or 0.2% to US$75.64 a barrel.

* Base metal prices rose by up to 1.4% on the London Metal Exchange on Monday with nickel leading the gains. But zinc fell by 0.2% and tin lost 0.1%. Gold fell on Monday as the US dollar recovered. Comex gold futures fell by US$2.10 an ounce or 0.2% to US$1,183.50 per ounce. Iron ore fell by US40c to US$75.10 a tonne on Monday.

Ahead: In Australia, weekly consumer sentiment data is released. In the US, producer prices, capital flows, the NAHB housing market index and weekly chain store sales data are issued.

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