US MORNING REPORT
In US economic news, mortgage applications rose by 1.0% in the latest week with the purchase market up 0.9% and the refinance index up 2.1%.
US budget negotiators have reached a provisional 2-year deal that will avoid another government shutdown in January.
European shares fell on Wednesday. While investors were heartened that another government shutrdown may be avoided in the US, some fret that means that the Federal Reserve may be more likely to reduce monetary stimulus next week. The FTSEurofirst 300 index fell by 0.5% with the UK FTSE down 0.2% and the German Dax was down 0.4%. Mining shares were weaker with BHP Billiton shares falling by 1.2% in London trade while Rio Tinto lost 1.3%.
US sharemarkets fell in line with markets in Europe on expectations that an end to the budget impasse removes an obstacle to the Federal Reserve beginning its program to wind back monetary stimulus. At the close, the Dow Jones was lower by 130 points or 0.8%, with the S&P 500 down by 1.1% and the Nasdaq was lower by 56.6pts or 1.4%.
US long-dated treasuries fell on Wednesday (yields higher). Traders assessed the latest budget deal and chances that the Federal Reserve will begin to taper bond purchases. Federal Treasury auctioned $21 billion of 10-year notes and will auction $13 billion of 30-year bonds on Thursday. US 2yr yields rose by almost 1 point to 0.306 while US 10yr yields rose by 4 points to 2.846%.
The US dollar was mixed against major currencies in European and US trade on Wednesday. The Euro fell to lows near US$1.3740 before rebounding to around US$1.3805, and was trading around US$1.3785 in afternoon New York trade. The Aussie dollar fell from highs near US91.35c to around US90.45c, and was near US90.50c in afternoon US trade. And the Japanese yen held between 102.20 yen per US dollar and JPY102.80 and was near JPY102.46 in afternoon US trade.
World oil prices were mixed on Wednesday. Traders weighed mixed inventory data. Figures from the US Energy Information Administration show that crude stocks fell in the latest week while gasoline stocks rose. And the International Energy Agency said that western oil demand returned to growth in the second quarter. Brent crude rose by US32c to US$109.70 a barrel while US Nymex crude fell by US$1.07 or 1.1% to US$97.44 a barrel.
Base metal prices rose by up to 1.2% on the London Metal Exchange on Wednesday with lead posting the strongest gain while nickel was up the least, lifting 0.7%. But gold eased modestly after the previous day´s solid gain. The Comex gold futures price fell by US$3.90 or 0.3% on Wednesday to US$1,257.20 per ounce. The iron ore price fell by 30c to US$139.10 a tonne.
Ahead: In Australia, monthly employment and credit & debit card data are released. In the US, weekly jobless claims and retail sales data are issued.
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