Australian Stock Market Report – Morning November 5, 2014

Retailer — Shoppers look over items on sale at a Macy's store in New York, November 23, 2012. Reuters/Keith Bedford

* In the US, durable goods orders fell by 1.1% in September with factory orders down by 0.6%, in line with forecasts. The trade deficit widened from US$40.1 billion to US$43.03 billion in September (forecast US$40 billion). The ISM New York index rose from 654.8 to 657.2 in October. And chain store sales were up 3.9% on a year ago in the latest week, down from 4.4% in the previous week.

* European shares fell on Tuesday on reports of divisions in the European Central Bank and challenges to the management style of chief Mario Draghi. The European Commission also cut growth forecasts, now tipping 1.1% growth in 2015, down from 1.7%. The FTSEurofirst 300 index fell by 1.0%, the UK FTSE lost 0.5% and the German Dax fell by 0.9%. In London trade shares in BHP Billiton were flat with Rio Tinto down 0.4%.

* US sharemarkets were mixed on Tuesday. Lower oil prices weighed on the energy sector but boosted airline stocks. And many investors chose to stay on the sidelines ahead of jobs data to be released on Friday. At the close of trade the Dow Jones was up by almost 18 points or 0.1%. The S&P 500 index was down by 0.3% while the Nasdaq was lower by 15 points or 0.3%.

* US treasury prices rose modestly on Tuesday (yields lower) in response to weaker equities markets and mixed economic data. Investors also focussed on the deflationary effects of lower oil prices. US 2 year yields were down 1 point to 0.518% while US 10 year yields were down 1 point to 2.34%.

* Major currencies were mixed against the US dollar in European and US trade on Tuesday. The Euro rose from lows near US$1.2500 to highs near US$1.2575, and was near US$1.2545 in late US trade. The Aussie dollar held broadly between US87.00c and US87.50c, and was near US87.35c in late US trade. The Japanese yen held between 113.16 yen per US dollar and JPY113.72 and was near JPY113.64 in late US trade.

* World oil prices fell to multi-year lows on Tuesday. The stronger US dollar made oil more expensive for buyers in Europe and Asia while investors responded to news that Saudi Arabia was cutting export prices to US buyers. Brent crude fell by US$1.96 or 2.3% to 4-year lows of US$82.82 a barrel. US Nymex crude price fell by US$1.59 or 2.0% to 3-year lows of US$77.19 a barrel.

* Base metal prices fell up to 3.0% on the London Metal Exchange on Tuesday with nickel leading the declines although aluminium lost just 0.7%. Gold eased to fresh 4-year lows on Tuesday with Comex gold futures down by US$2.10 an ounce or 0.2% to US$1,167.70 per ounce. Iron ore fell by US70c on Tuesday or 0.9% to US$77.10 a tonne.

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