Scoreboard: Healthy M&A

Wall Street rallied, with healthcare stocks leading the charge on M&A activity, while a lift in German sentiment helped buoy European shares.

In the US, producer prices rose by 0.2 per cent in October to be up 1.5 per cent over the year. Core prices (ex food & energy) rose by 0.4 per cent to be up 1.8 per cent on a year ago. The NAHB housing market index improved from 54 to 58 in November.

European shares rose on Tuesday, boosted by the lift in German sentiment. The ZEW survey which showed German analyst and investor sentiment rose from -3.6 to 11.5 in November -- marking the first increase in almost a year. The automotive sector (up 1.5 per cent) was the best performing sector after data showed new car sales in Europe rose 6.2 per cent in October compared with a year ago. The FTSEurofirst 300 index rose by 0.6 per cent with the UK FTSE also up by 0.6 per cent while the German Dax gained 1.6 per cent. In London trade shares in BHP Billiton fell 0.5 per cent and Rio Tinto lost 1.8 per cent.

US sharemarkets rallied on Tuesday lifting the S&P 500 to a record high. Merger and acquisition activity was in focus with the healthcare sector benefiting for the second day from news that Allergan agreed to be bought by Actavis in a deal worth up to $US65.5 billion. The S&P Healthcare index rose 1.4 per cent on Tuesday, while the Nasdaq biotech sector rose 2.2 per cent. At the close of trade the Dow Jones was up by 40 points or 0.2 per cent. The S&P 500 index was up by 0.5 per cent and the Nasdaq was up by 31 points or 0.7 per cent.

US treasuries rose on Tuesday (yields lower) as investors digested the business inflation figures. Traders remained cautious of setting positions ahead of the release of minutes from the last Federal Reserve meeting. US two-year yields fell by 1 point to 0.508 per cent while US 10-year yields fell by 2 points to 2.324 per cent.

The US dollar fell against major currencies on Tuesday. The Euro rose from lows near $US1.2465 to highs near $US1.2545, and was around $US1.2535 in late US trade. The Aussie dollar fell from highs near US87.45c to around US86.85c, before rebounding to US87.25c in late US trade. The Japanese yen traded between 116.90 yen per US dollar to ¥116.40 and was at ¥116.85 in late US trade.

World oil prices fell again on Tuesday as traders focused on data showing that OPEC producer Saudi Arabia raised crude shipments in September. Brent crude fell by US90c or 1.1 per cent to $US78.41 a barrel while the US Nymex crude price fell by $US1.03 or 1.4 per cent to $US74.61 a barrel.

Base metal prices were weaker on the London Metal Exchange on Tuesday with aluminium, copper and lead all down 1 per cent. Other metals lost between 0.6 per cent-0.9 per cent. Gold rose on Tuesday as the US dollar eased. Comex gold futures rose by $US13.60 an ounce or 1.1 per cent to $US1,197.10 per ounce. Iron ore fell by $US3 or 4.2 per cent to $US72.10 a tonne on Tuesday.

Ahead: In Australia, no economic data is released. In the US, housing starts, building permits and the FOMC minutes are issued.

Savanth Sebastian is an economist with CommSec.

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