Australian Stock Market Report – Morning 1/20/14

US MORNING REPORT
(6.45am AEDT)

In US economic news, the University of Michigan US Consumer Sentiment Index eased from 82.5 to 80.4 in January. US industrial production rose by 0.3% in December, with manufacturing output up 0.4% in the month. For the quarter industrial production advanced at a 6.8% pace - the fastest quarterly growth rate in over three years. US housing starts fell by 9.8% in December - marking the biggest drop in nine months. US building permits fell by 3% in December. Weather may have played a part in the weaker housing data.

European shares rallied on Friday on healthy trading volumes. Miners were the biggest contributors, with investors more optimistic about global growth. Glencore Xstrata rose by 3.4%, and Lonmin lifted by 3.1%. The STOXX 600 Euro Basic Resources index rose by 2% to be up 7% for the week. The FTSEurofirst 300 index rose by 0.5% with the UK FTSE up by 0.2% and the German Dax gained 0.3%. Mining shares were higher in London trade with BHP Billiton shares up 1.6% while Rio Tinto rose by 1.5%.

US share markets were mixed on Friday following a round of disappointing earnings. General Electric shares dropped 2.3% after reporting disappointing 2013 profit margins. Intel lost 2.6%, and was among the top drags on US indices a day after posting weaker four-quarter earnings. Bucking the trend strong earnings in the prior session by American Express (up 3.6%) and strength in Visa (up 4.7%) supported the Dow Jones. At the close of trade, the Dow Jones was up by 42 points or 0.3%, while the S&P 500 fell by 0.4% and the Nasdaq fell by 0.5%. For the week the Dow rose 0.1%, the S&P 500 slipped 0.2% and the Nasdaq gained 0.6%.

US treasury prices rose on Friday (yields lower), as traders focused on the upcoming Fed meeting. US 2 year yields fell 2 points to 0.38% while US 10 year yields fell 2 points to 2.82%.

The US dollar rose against most major currencies on Friday following the upbeat industrial production data. The Euro fell from highs near US$1.3620 to lows near US$1.3520 and was trading around US$1.3540 at the close of US trade. The Aussie dollar fell from highs near US88.20c to lows near US87.60c, and held near US87.75c at the close of US trade. And the Japanese yen traded between 104.45 yen per US dollar and JPY104.20 and was trading near 104.05 in Monday morning trade.

World oil prices were mixed on Friday as expectations of increased supply from the Middle East was offset against increased demand for heating fuels in the US. Brent crude fell by US58c or 0.5% to US$106.48 a barrel while US Nymex crude rose by US41c or 0.4% to US$94.37 a barrel.

Base metal prices were higher on the London Metal exchange on Friday, with the exception of Tin (down 0.3%). Aluminium was the best performer up by 1.3%. And the Comex gold futures price rose by US$11.70 or 0.9% to US$1,251.90 per ounce. For the week gold lifted by 0.4%. The iron ore price fell by US$1 to US$127.30 a tonne.

Ahead: In Australia, the CommSec State of the States report and the TD Inflation gauge are released. In the US, no economic data is expected with markets closed for the Martin Luther King Jr public holiday.

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