Australian Stock Market Report – Morning 11/28/13

MORNING REPORT
(8am AEDT)

In US economic news, durables goods orders fell by 2.0pct in October on the back of aircraft orders. The ex-transportation reading fell by a more modest 0.1pct. The final Michigan confidence reading edged up from 72.0 to 75.1 in November. The Chicago PMI dipped from 65.9 to 63.0. US jobless claims fell by a larger than expected 10,000 to 316,000 last week and raised expectations for a strong November payrolls number.

European shares rose sharply on Wednesday, driven by upbeat US data. News of a German political deal, where conservatives and the centre-left democrats finally agreed to ´´grand coalition´´ after two months of negotiations, paved the way for Angela Merkel to form a government by Christmas, and supported the broader market rally. The FTSEurofirst 300 index rose by 0.5pct, the German Dax rose by 0.7pct to fresh record highs and the UK FTSE gained 0.2pct. In UK trade, shares in BHP Billiton rose by 0.2pct while Rio Tinto rose by 0.9pct.

US sharemarkets inched higher on Wednesday, following better than expected jobless claims and confidence data. Volumes were thin ahead of the Thanksgiving holiday. Hewlett-Packard jumped 7.7pct after reporting stronger-than-expected results late on Tuesday. At the close of trade, the Dow Jones rose 25pts or 0.2pct, with the S&P 500 up by 0.3pct while the Nasdaq lifted 27pts or 0.7pct.

US long-dated treasuries fell on Wednesday (yields higher) as data suggested further improvement in labour market conditions. Liquidity remained light in a holiday shortened week. US 2yr yields were flat at 0.29pct while US 10yr yields were up by 3pts to 2.74pct.

The US dollar rallied against the Euro and commodity currencies in European and US trade on Wednesday, as upbeat US economic data supported views of a pullback in Fed stimulus. The Euro fell from highs near US$1.3615 to lows near US$1.3560 and was heading into the US close near US$1.3570. The Aussie dollar fell from highs near US91.35c to lows near US90.60c and headed into the US close near US90.75c. And the Japanese yen weakened from near 101.45 yen per US dollar to JPY102.20 and was near JPY102.15 in late US trade.

World oil prices were mixed on Wednesday as a higher-than-expected build in US inventories was offset by unrest in Libya. US crude stockpiles lifted by 3 million barrels against expectations of a build of just 600,000 barrels. Brent crude rose by US49c to US$111.37 a barrel while US Nymex crude fell by US$1.38 or 1.5pct to US$92.30 a barrel.

Base metal prices were weaker on the London Metal Exchange on Wednesday. Tin recorded the biggest decline down 1.4pct while nickel lost 1.3pct. Other metals fell between 0.7pct-1.0pct. The gold futures price fell on Wednesday with the Comex December futures gold price down by US$3.60 to US$1,237.90 per ounce - a five-month low. The iron ore price rose by US10c to US$136.00 a tonne.

Ahead: In Australia, September quarter CAPEX figures and new home sales are released. In the US no major economic data is scheduled.

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