Lower inventories fuel higher prices

November 19th, 2009  by Katy Loi

Closing Data

	Current	Change	%
Dow Jones	10426.31	-11.11	-0.1%
NASDAQ	2193.14	-10.64	-0.5%
S P 500	1109.8	-0.52	-0.0%
FTSE 100	5342.13	-3.8	-0.1%
Nikkei 225	9676.8	-53.13	-0.5%
ASX 200	4,739	9.6	0.2%
COMEX Gold - Dec 09	1141.3	1.9	0.2%
COMEX Silver - Sep 09	18.415	0.028	0.2%
COMEX Copper - Sep 09	311	0.15	0.0%
WTI Spot	78.81	-0.33	-0.4%
AUD-USD	0.9295	-0.0013	-0.1%
Aluminium	2035.5	33	1.6%
Copper	6926	165	2.4%
Lead	2405	74	3.2%
Nickel	17300	640	3.8%
Tin	15255	455	3.1%
Zinc	2252	17	0.8%

U.S. stocks slipped, pulling the Standard & Poor’s 500 Index down from a 13-month high. Technology companies slid after profit forecasts at Autodesk Inc. and Salesforce.com Inc. trailed some analysts estimates.   Residential construction in the U.S. unexpectedly dropped in October amid concern a homebuyer tax credit would expire, illustrating the market’s dependence on government help to sustain a recovery as job losses mount.

 Crude oil rose after the government reported that U.S. crude and fuel supplies dropped along with refinery production and imports.  Oil inventories fell 887,000 barrels to 336.8 million last week, the Energy Department said. Stockpiles were forecast to increase by 300,000 barrels, according a Bloomberg News survey of analysts. Fuel inventories decreased as refiners operated at the slowest pace in more than a year.

 U.S. gold futures ended higher on Wednesday, after scaling a record high above $1,150 an ounce earlier in the session. Stronger-than-expected U.S. consumer prices and a steadily weakening dollar stirred inflation fears. A U.S. government report showed consumer prices rose faster than expected in October, boosting gold's inflation hedge status.  Gold was supported, as concerns still exist for banks and the economy. There was positive money flow into commodities and other investments.  The Australian dollar fell further from 15-month highs on Wednesday as investors seized on recent weakness to take profits, but few doubted it was still poised to head higher aided by rising local interest rates.

Australian shares are set for a flat start on Thursday; higher metals and gold prices may boost miners, offering some support. Share index futures stood 8 points higher at 4,762 points, a 23 point premium to the 4,739 close in the underlying S&P/ASX 200 index on Wednesday.  For the last week, our market seems to be range bound with lack of conviction in either direction; it struggles to break the last high of 4830 but well supported at 4710. Technical indicators show gold futures weakening in momentum despite making new highs.  Crude oil seems well supported above 78.00 which may see good entry opportunities in oil stocks such as OSH and WPL as they are sitting on trend line support and are trading in  strong up trend channel.

In company news out today:
Statements from Brambles Ltd BXB.AX, Goodman Fielder GFF.AX, Fortescue Metals Group Ltd (ASX: FMG.ax) during their annual shareholders' meetings.

Australian building products maker James Hardie Industries Ltd (ASX: JHX.ax) could be under pressure after a surprising drop in U.S. housing starts last month. James Hardie earns about 80 percent of its profit from the United States.
Gainers:

Arrow Energy shares gained on expectations that it will report positive drilling results at its annual meeting on Friday or in the next few weeks.

AGL Energy has lodged an expression of interest in buying up some of the power assets that are up for sale from the NSW government.

AWB said it expects to report an improved profit result in 2010, as it announced a 2009 net loss of $250.8 million today.
Best performing sector at the close was the Real Estate Investment Trust index, up 13 points at 906.

The best performing stock in the S&P/ ASX200 was Linc Energy and shares rose 12.87 per cent to $1.71. Shares in Arrow Energy and Aquila Resources also improved.

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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