US MORNING REPORT
In US economic news, retail sales rose by 0.7%, ahead of forecasts for a gain of 0.6%. Excluding gasoline and autos, sales rose 0.6%. Import prices fell 0.6% in November while export prices rose 0.1%. And claims for unemployment benefits rose by 68,000 to 368,000, well ahead of forecasts for a rise to 320,000. The Labor Department said that a late Thanksgiving affected seasonal adjustment of the data.
European shares fell again on Thursday. Investors continued to book profits after good US retail sales raised the chance that the Federal Reserve may reduce monetary stimulus next week. The FTSEurofirst 300 index fell by 0.9% with the UK FTSE down 1.0% and the German Dax was down 0.7%. Mining shares were weaker with BHP Billiton shares falling by 1.7% in London trade while Rio Tinto lost 0.7%.
US blue-chip shares fell for a third day as investors continued to mull whether the Federal Reserve will begin its program to wind back (taper) monetary stimulus. Shares in Hilton Worldwide were up 7.5% on their market debut. Shares in Facebook rose by 5% on news that it will join the S&P500 index. At the close, the Dow Jones was lower by 104 points or 0.7%, with the S&P 500 down by 0.4% while the Nasdaq fell by 5 points.
US treasuries fell on Thursday (yields higher). Traders analysed the latest economic data and the chances that the Federal Reserve will begin to taper bond purchases. Federal Treasury auctioned $13 billion of 30-year bonds. US 2yr yields rose by almost 2 points to 0.326 while US 10yr yields rose by 2 points to 2.88%.
The US dollar rose against major currencies in European and US trade on Thursday on expectations that the Federal Reserve may start ´tapering´ next week. The Euro fell from near US$1.3800 to around US$1.3735, and was trading around US$1.3745 in afternoon New York trade. The Aussie dollar fell from highs near US90.65c to around US89.15c, and was near US89.30c in afternoon US trade. And the Japanese yen eased from 102.50 yen per US dollar to JPY103.31 and was near JPY103.32 in afternoon US trade.
World oil prices were again mixed on Thursday. Brent crude fell on expectations of higher oil supplies from Libya. And traders mulled a stronger US dollar, better-than-expected US retail sales data and expectations that the Federal Reserve could start winding back stimulus next week. Brent crude fell by US$1.03 or 0.9% to US$108.67 a barrel while US Nymex crude rose by US6c or 0.1% to US$97.50 a barrel.
Base metal prices fell up to 1.4% on the London Metal Exchange on Thursday with aluminium posting the biggest decline while copper went against the trend, lifting 0.2%. But gold fell sharply in response to a stronger greenback with the Comex gold futures price down by US$32.30 or 2.6% on Thursday to US$1,224.90 per ounce. The iron ore price fell by $1.20 to US$137.90 a tonne.
Ahead: In Australia, lending finance data is released. Westpac is holding its annual general meeting while Caltex will give a profit update. In the US, the producer price index is issued.
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