Scoreboard: European stress

European shares eased on fears over bank stress test results, while Wall Street continued to be buoyed by strong corporate results.

In the US, new home sales rose by 0.2 per cent to a six-year high, hitting an annualised rate of 467,000. 

European shares eased on Friday with the FTSEurofirst 300 index down by 0.3 per cent. Corporate earnings were mixed; investors monitored news of the spread of Ebola; and there was caution ahead of European bank stress test results. The UK FTSE also lost 0.5 per cent and the German Dax eased by 0.7 per cent. And Australia's major miners were lower in London trade with shares in BHP Billiton down by 1.9 per cent while Rio Tinto lost 1.6 per cent.

US sharemarkets rose on Friday in response to encouraging economic data and generally positive corporate earnings results. Shares in Microsoft rose 2.5 per cent after posting its latest earnings. But shares in Amazon fell by 8.3 per cent after the online retailer disappointed with its sales forecasts. The Dow Jones rose by almost 128 points or 0.8 per cent with the S&P 500 index up by 0.7 per cent while the Nasdaq rose by 31 points or 0.7 per cent. Over the week the Dow Jones rose by 2.6 per cent, the S&P 500 index was up by 4.1 per cent (best week since January 2013) and the Nasdaq rose by 5.3 per cent.

US treasury rose modestly on Friday (yields lower) as traders adjusted positions ahead of the Federal Reserve meeting to be held over Tuesday and Wednesday. Safe-haven assets were also in demand after a doctor tested positive for Ebola in New York. US two-year yields were up by 2 points to 0.375 per cent while US 10-year yields were up by 3 points to 2.20 per cent. Over the week US two-year yields rose by 4 points and US 10-year yields rose by 8 points.

Major currencies were mixed against the greenback over European and US sessions on Friday. The Euro rose from lows near $US1.2635 to highs near $US1.2695, ending US trade near $US1.2670. The Aussie dollar rose from lows near US87.50c to highs near US88.20c before settling and ending the US session near US87.95c. And the Japanese yen held between ¥107.80 per US dollar and ¥108.28, ending US trade near ¥108.15. This morning the Euro is near $US1.2690, Aussie at US88.05c and Japanese yen at ¥108.20. 

World oil prices fell on Friday on news that Iraq lifted oil supply in October while Libya is now pumping at least 800,000 barrels a day, four times more than five months ago. Brent crude fell by US70c to $US86.13 a barrel while the US Nymex crude price fell by $US1.08 or 1.3 per cent to $US81.01 a barrel. Over the week Brent fell by US3 cents while Nymex crude fell by $US1.74 or 2.1 per cent.

Base metal prices were mixed on the London Metal Exchange on Friday. Aluminium, lead and nickel fell up to 1.8 per cent while other metals rose up to 0.3 per cent. Over the week prices were also mixed with nickel down 4.4 per cent while copper rose 1.1 per cent. Gold rose slightly on Friday with the Comex gold futures quote up by $US2.70 an ounce or 0.2 per cent to $US1,231.80 per ounce. Over the week, gold rose by $US2.80 or 0.2 per cent. Iron ore was down by US20c on Friday or 0.3 per cent to $US79.80 a tonne and lost US80c over the week.

Ahead: The Australian sharemarket is expected to get off to a positive start in response to gains in the US on Friday. The futures market is tipping an 18 point gain but resource stocks may be laggards with oil, iron ore and a number of base metal prices falling on Friday. In Australia, Reserve Bank Head of Financial Stability Luci Ellis speaks at a conference. In the US, pending home sales and the Markit "flash" composite purchasing managers index are released.

Craig James is chief economist at CommSec. 

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