Australian Stock Market Report – Morning 1/17/14

US MID MARKET MORNING REPORT
(7.00am AEDT)

In US economic news, the NAHB housing market index dipped from 57 to 56 points in January, suggesting home builder confidence had faded a bit at the start of 2014, although most developers expected the housing recovery to continue. US jobless claims fell by 2,000 to 326,000 in the past week. US consumer prices posted the largest gain in six months, rising by 0.3% in December to be up 1.5% over the year. Core prices rose by a much more sedate 0.1%. The Chicago PMI was revised higher from 57.9 to 60.2 in December.

Fed Chairman Bernanke spoke at a Brookings Institution Forum, reiterating that the Fed has plenty of tools to manage interest rates, while also having the ability to tighten policy with a bigger balance sheet. Bernanke cited that the majority have studies have shown that QE is at least somewhat effective. Bernanke believes inflation is not a significant risk of current policy and that the main risk is potential for financial instability.

European shares eased on Thursday, hit by losses in the retail sector after corporate earnings. Carrefour - the world´s second biggest retailer reported disappointing sales figures. The STOXX 600 Euro Retail index fell by 0.8%. Offsetting the losses was the strength in resource stocks. The FTSEurofirst 300 index fell by 0.2% with the UK FTSE down by 0.1% and the German Dax lost 0.2%. Mining shares were higher with BHP Billiton shares up 3.8% in London trade while Rio Tinto rose by 2.5%.

US share markets fell on Thursday, following a round of disappointing earnings. Financial stocks were the biggest drag on the market after Citigroup (down 4.1%) and Goldman Sachs (down 2.2%) reported weaker-than-expected results. With an hour of trade, the Dow Jones was down by 66 points or 0.4%, while the S&P 500 fell by 0.2% and the Nasdaq rose by 0.1%.

US treasury prices rose on Thursday (yields lower), after inflation data came in largely as expected. US 2 year yields fell 2 points to 0.39% while US 10 year yields fell 5 points to 2.85%.

The US dollar largely tracked sideways against most major currencies on Thursday. The Euro fell from highs near US$1.3650 to lows near US$1.3585 and was trading around US$1.3615 in late US trade. The Aussie dollar touched lows near US87.75c before lifting to US88.20c, and held near US88.10c in late US trade. And the Japanese yen traded between 104.15 yen per US dollar and JPY104.80 and was trading near 104.30 in late US trade.

World oil prices eased on Thursday in light trade as more supply from the Middle East was offset against news of lower output from OPEC. Brent crude fell by US4c to US$107.06 a barrel while US Nymex crude fell by US18c or 0.2% to US$93.96 a barrel.

Base metal prices were mixed on the London Metal exchange on Thursday, with Nickel once again the best performer, up 1.1%. And the Comex gold futures price rose by US$1.90 or 0.2% to US$1,240.20 per ounce. The iron ore price fell by US$1.30 to US$128.30 a tonne.

Ahead: In Australia, no economic data is released. In the US, retail sales, housing starts and industrial production are released.

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