Australian Stock Market Report – Morning 12/16/13

US MORNING REPORT
(5.15am AEDT)

In US economic news, producer prices fell by 0.1% in November with the core rate (excludes food and energy) up 0.1%. The core rate was in line with expectations.

European shares fell slightly on Friday, hitting 2-month lows. Generally though, trading was quiet ahead of the US Federal Reserve meeting. The FTSEurofirst 300 index fell by 0.2% with the UK FTSE and German Dax both down 0.1%. Mining shares were mixed with BHP Billiton shares up 0.2% in London trade while Rio Tinto lost 0.4%.

US sharemarkets ended largely flat on Friday. Investors squared positions at the end of the week ahead of the Federal Reserve meeting to be held over Tuesday and Wednesday. At the close, the Dow Jones was up almost 16 points or 0.1%, with the S&P 500 down by less than 0.1% while the Nasdaq rose by 2.5 points or 0.1%. Over the week the Dow Jones and S&P 500 both lost 1.7% while the Nasdaq fell by 1.5%.

US treasuries were mixed on Friday as traders squared positions and generally moved to the sidelines until the Federal Reserve decision is handed down. US 2 year yields rose by less than 1 point to 0.33% while US 10 year yields fell by 2 points to 2.866%. Over the week both US 2 year and US 10 year bond yields rose by 3 points.

The US dollar was mixed against major currencies in European and US trade on Friday. The Euro fell from highs near US$1.3765 to around US$1.3705, and was trading around US$1.3740 at the US close. The Aussie dollar rose from lows near US89.05c to around US89.70c, and was near US89.60c at the US close. And the Japanese yen lifted from 103.86 yen per US dollar to JPY103.00 and was near JPY103.19 at the US close.

World oil prices were again mixed on Friday. Brent crude rose on doubts about the resumption of oil supplies from Libya. But Nymex fell on worries about whether the Federal Reserve would start to wind back monetary stimulus. Brent crude rose by US16c or 0.1% to US$108.83 a barrel while US Nymex crude fell by US90c or 0.9% to US$96.60 a barrel. Over the week, Brent fell by 2.5% while Nymex fell by 1.1%.

Base metal prices rose up to 1.2% on the London Metal Exchange on Friday with lead posting the biggest increase while aluminium rose just 0.4%. Over the week metals rose up to 4.6% with zinc leading the way. But tin fell 1.8%. Gold rose on Friday as investors embraced the safe haven asset ahead of the Federal Reserve meeting. The Comex gold futures price was up by US$9.70 or 0.8% on Friday to US$1,234.60 per ounce. Over the week gold rose by 0.5%. The iron ore price fell by $1.90 to US$136.00 a tonne and was down $3.20 over the week.

Ahead: In Australia, no major economic data is scheduled. In China the ´´flash´´ manufacturing index is released at 12.45pm AEDT. In the US, the Empire State manufacturing index is issued together with the ´´flash´´ purchasing managers index and revised productivity data.

[Kick off your trading day with our newsletter]