Australian Stock Market Report – Morning 11/29/13

MORNING REPORT
(7am AEDT)

In European economic news, German flash CPI inflation jumped from 1.2pct to 1.6pct in November. The numbers suggest that Eurozone CPI inflation will also bounce significantly tomorrow. Eurozone confidence surveys improved further in November. The economic confidence reading rose to 98.5, the business climate indicator, services and industrial confidence readings all improved. All are indicative of ongoing gradual recovery in the economy.

The Bank of England surprised markets by announcing changes to one of its flagship credit easing measures. The BoE has indicated that there will be changes to the terms of the Funding for Lending Scheme (FLS) extension to refocus lending towards supporting businesses in 2014. The BoE has decided to end FLS incentives for mortgage lending from February 2014 onwards. "Activity in the housing market is picking up and house price inflation appears to be gaining momentum", so there is "no longer a need for the FLS to provide further broad support to household lending." In short the FLS is being refocused "where it is most needed - to underpin the supply of credit to small businesses over the next year´´.

European shares rallied on Thursday in light trade. Italian shares outperformed after the Italian Senate expelled former Prime Minister Berlusconi, fuelling hopes of political stability. Milan´s FTSE MIB rose 0.9pct. The FTSEurofirst 300 index rose by 0.4pct, the German Dax rose by 0.4pct and the UK FTSE gained 0.1pct. In UK trade, shares in BHP Billiton lifted by 1.7pct while Rio Tinto rose by 3.9pct after unveiling plans to cut costs by $3 billion.

US sharemarkets were closed for the Thanksgiving holiday.

US treasury markets were closed for the Thanksgiving holiday.

The US dollar eased against the Euro in European and US trade on Thursday, following the stronger-than-expected German flash inflation read. The Euro rose from lows near US$1.3565 to highs near US$1.3615 and was trading near US$1.3605. The Aussie dollar fell from highs near US91.45c to lows near US90.85c and headed into the US close near US91.10c. And the Japanese yen weakened from near 101.95 yen per US dollar to JPY102.35 and was near JPY102.25 in late US trade.

World oil prices eased on Thursday under pressure from the higher-than-expected build in US inventories. Brent crude fell by US52c to US$110.85 a barrel while US Nymex crude fell by US8c or 0.1pct to US$92.22 a barrel.

Base metal prices were mixed on the London Metal Exchange on Thursday. Nickel reversed some of the prior session's losses gaining 0.9pct, while lead lost 0.4pct. Gold futures rose in electronic trade on Thursday with the Comex February futures gold price up by US$6.60 to US$1,244.50 per ounce. The iron ore price rose by US40c to US$136.40 a tonne.

Ahead: In Australia, private sector credit figures are released. In the US no major economic data is scheduled.

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