Australia Stock Market Overview - 09/27/2011


(7am AEST)

US new home sales eased by 2.3pct to an annual rate of 295,000 in August, in line with the consensus forecast. There were just 162,000 new homes available for sale - the lowest on record. The Chicago national activity indicator weakened from an upwardly revised reading of +0.02 in July to minus 0.43 points in August. The Dallas Fed manufacturing output index lifted from +1.1 in July to +5.9 in August.

CNBC is quoting European Union officials saying that there are advanced plans to leverage the European Financial Stability Fund. The plan is to use the expanded EFSF to shore up bank capital and provide seed money for the European Investment Bank to buy sovereign debt.

European shares rose on Monday on speculation of fresh measures to address the European debt crisis. Analysts believe that the European Central Bank will deliver a big rate cut next month while media continues to speculate about plans to use the European Financial Stability Fund. The FTSEurofirst index rose by 1.8pct while the German Dax lifted by 2.9pct and the UK FTSE gained 0.5pct.

US blue-chip shares spiked higher at the open of trade and continued to drift higher over the session. Financial stocks led the way with the KBW Banks index up 4.8pct. The Dow Jones rose by almost 272pts or 2.5pct with the S&P 500 higher by 2.3pct while the Nasdaq gained just over 33pts or 1.4pct.

US long-term treasuries fell again on Monday (yields higher) as equities markets in Europe and the US continued to recover. US 2yr yields were steady near 0.23pct and US 10yr yields rose by 6pts to 1.90pct.

The Euro and commodity currencies rose in European and US trade on Monday as equities markets continued to stabilise. The Euro rose from lows just above US$1.3360 to US$1.3540 before ending the US session near US$1.3510. The Aussie dollar also lifted from lows around US96.10c to US98.25c, before ending US trade near US98.15c. And the Japanese yen held in a tight range from 76.23 yen per US dollar to JPY76.50 and ended US trade near JPY76.45.

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Global crude oil prices ended mixed on Monday as a sense of calm returned to financial markets. Nymex crude oil rose by US39c or 0.5pct to US$80.24 a barrel and London Brent crude fell by US3 cents to US$103.94 a barrel. Nymex has since lifted to US$81.25 a barrel.

Base metal prices were mixed on the London Metal Exchange on Monday. Tin rose 0.6pct and copper edged up 0.1pct. But other metals fell with lead down 4pct with other metals lower by up to 1.6pct. And the gold price fell again with the Comex December gold price lower by US$45 an ounce or 2.7pct to US$1,594.80. Gold has since risen to US$1,622 an ounce.

Ahead: In Australia, no major economic data is scheduled. In the US, consumer confidence data, the S&P/Case Shiller home price index and Richmond Fed survey are released. (From Craig James, CommSec Chief Economist)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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