Scoreboard: Forex fail

Financial stocks fell as five banks were fined $US3.4bn over allegations of manipulating the foreign exchange market, while oil prices slid further.


In the US, wholesale inventories rose by 0.3 per cent in September after a 0.6 per cent gain in August -- a result that should support the September quarter GDP result.

European shares fell on Wednesday giving back part of the prior two sessions of gains. Disappointing earnings results from the utility stocks weighed on the sector. Germany's top utility E.ON fell 3.4 per cent after posting a steep drop in profits in its key market Russia. The STOXX Europe utility index fell 2.4 per cent. The STOXX European Banking Index fell by 2.1 per cent after regulators imposed penalties in relation to manipulating the foreign exchange market. UBS, Citigroup, HSBC, RBS, Bank of America and JP Morgan were fined a total of $US4.3 billion while investigations into Barclays were still ongoing. The FTSEurofirst 300 index fell by 1.1 per cent with the UK FTSE down 0.3 per cent and the German Dax down 1.7 per cent. In London trade shares in BHP Billiton rose by 0.5 per cent with Rio Tinto gained 1.2 per cent.

US sharemarkets were mixed on Wednesday. Financial stocks lost ground after the 13-month foreign exchange probe saw six banks fined a total of $US4.3 billion. Macy's rose 4.6 per cent after it posted strong third quarter earnings. At the close of trade, the Dow Jones was down by almost 3 points; the S&P 500 index was down 0.1 per cent and the Nasdaq was up by 15 points or 0.3 per cent.

US treasuries rose on Wednesday (yields lower). Concerns about economic weakness in Europe and news that Russian military had escalated troop numbers along the Ukrainian border drove demand for safe-haven assets. US two-year yields fell 1 point to 0.535 per cent while US 10-year yields fell 1 point to 2.361 per cent.

Major currencies were mixed against the US dollar in European and US trade on Wednesday. The Euro fell from highs near $US1.2495 to lows near $US1.2420, and was around $US1.2425 in late US trade. The Aussie dollar rose from lows near US86.70c to near US87.45c, and was around US87.05c in late US trade. The Japanese yen weakened from 115.00 yen per US dollar to ¥115.75 but was near ¥115.60 in late US trade.

World oil prices fell again on Wednesday as Saudi Arabia's oil minister said the kingdom will not engage in a price war but made no mention about Saudi's position ahead of the OPEC meeting on November 27. Brent crude fell by $US1.67 or 2 per cent to $US80 a barrel while the US Nymex crude price fell by US76c or 1 per cent to $US77.18 a barrel.

Base metal prices were mostly higher on the London Metal Exchange on Wednesday with the exception of tin (down 0.3 per cent) and copper (down 0.1 per cent). Nickel led the gains, up 1.2 per cent. Gold fell modestly on Wednesday with Comex gold futures down by $US3.90 an ounce or 0.3 per cent to $US1,159.10 per ounce. Iron ore fell by US10c to $US75.40 a tonne on Wednesday.

Ahead: In Australia, RBA Assistant Governor Kent speaks in Sydney. In the US, no economic data is expected. China releases data on retail sales, industrial production and fixed asset investment.

Savanth Sebastian is an economist with CommSec.