While you were sleeping: US dollar hits commodities, Wall St down

Gains in the US dollar amid bets on a US Federal Reserve interest rate increase in December pushed commodities including copper and gold lower.

The strong greenback is hitting commodities denominated in it. Copper dropped below $US4500 a metric ton for the first time since 2009.

The likelihood of higher Fed rates by year-end is 74%, futures show, up from 50% at the end of October, according to Bloomberg.

"The biggest factor here is the dollar," Hans van Cleef, a senior energy economist at ABN Amro in Amsterdam, told Reuters. "It is having an impact on all major commodities at the moment."

Gold was down 0.9% at $US1066.80 an ounce while oil also fell despite Saudi Arabia reiterating its willingness to work with Opec and other oil-producing countries to stabilise prices.

Crude futures settled at $US41.88 a barrel in New York, a fall of 0.05%.

"The Saudis' past promises on working for price stability has led to nothing, so it wasn't surprising there was as much disbelief as initial excitement over today's announcement," John Kilduff, partner at New York energy hedge fund Again Capital, told Reuters.

"But all said, they are the biggest movers in Opec, so their statement is having a positive impact."

Wall Street goes lower
Wall Street moved lower after a low-key day's trading which swing between gains and losses.

At the close, the Dow Jones Industrial Average was down 31.13 points, or 0.2%, at 17,792.68. The Standard & Poor's 500 Index edged down 0.1% to 2086.59, while the Nasdaq Composite Index fell marginally by 0.05% to 5102.48.

The Dow was weighed down by a slide in shares of Pfizer, which contributed five points to the index’s decline.

The pharmaceutical company’s stock fell 2.5% after it and the Ireland-based maker of Botox, Allergan, agreed on a roughly $US150 billion merger deal. Allergan shares fell 2.8%.

"The lure of tax advantages from a Dublin head office has been a significant factor in driving this deal," said John Colley, a professor who studies large-scale mergers at England's Warwick Business School.

"The threat of succumbing to US tax rates has meant that Pfizer has been desperate for a deal outside the US."

The latest data underpinned the view that the US housing industry is improving. A National Association of Realtors report showed US existing home sales dropped 3.4% to an annual rate of 5.36 million units in October, down from 5.55 million units in September.

"This is the same pattern of tight inventory and low first-time buyers that we've seen for several years now," Stephen Phillips, president of Berkshire Hathaway HomeServices in Irvine, California, told Reuters. "We're up nicely on units and price from a year ago, so the market is in good position to improve steadily from here."

In Europe, the Stoxx 600 Index ended the session with a 0.4% decline from the previous close.

Germany's DAX Index slipped 0.3%, France's CAC 40 Index fell 0.4%, while the UK's FTSE 100 Index dropped 0.5%.

Updated for Wall Street close at 10am (NZ time)

(BusinessDesk)