Australian Stock Market Report – Morning 1/23/14

US MID SESSION MORNING REPORT
(7am AEDT)

European shares edged higher on Wednesday, led by solid results from Dutch technology firm ASML. But concerns about earnings across the broader market kept a lid on the advance. ASML the world´s leading provider of tools for making computer chips, rose by 7%, after it beat forecasts for fourth quarter results and reinterred an upbeat outlook for first-half sales. Portuguese shares (down 3.3%) underperformed the broader market, pressured by a slump in the country´s banks after local media reported that the finance minister hosed down expectations that deferred bank taxes would be converted into credits. The FTSEurofirst 300 index rose by 0.1% with the UK FTSE down by 0.1% and the German Dax down 0.1%. Mining shares were mixed in London trade with BHP Billiton shares down 1.1% while Rio Tinto rose by 0.4%.

US share markets were mixed on Wednesday following a mixed round of corporate earnings. IBM lost 3.3% and was the biggest drag on the Dow and S&P500 after missing revenue expectations amid weak demand, particularly in growth markets like China. Luxury handbag maker Coach fell 6% after disappointing sales and losing market share to competitors. With just over an hour of trade left, the Dow Jones was down by 39 points or 0.2%, while the S&P 500 rose by 0.1% and the Nasdaq gained 0.4%.

US treasury prices fell on Wednesday, (yields higher), with prices dragged lower by weaker German government debt. US 2 year yields rose 1 point to 0.40% while US 10 year yields were rose by 2.86%.

The US dollar recovered from early losses against the Aussie dollar and was stronger against the Euro on Wednesday. Focus was on next week´s FOMC meeting. The Euro touched early lows near US$1.3535 before lifting to highs near US$1.3580 and was trading around US$1.3545 in late US trade. The Aussie dollar fell from highs near US88.85c to lows near US88.35c, and held near US88.40c in late US trade. And the Japanese yen traded in a tight range between 104.50 yen per US dollar and JPY104.25 and was trading near 104.40 in late trade.

World oil prices were higher on Wednesday as investors waited on the US oil inventory report. Brent crude rose by US$1.51 or 1.4% to US$106.76 a barrel while US Nymex crude rose by US$1.74 or 1.8% to US$96.73 a barrel.

Base metal prices were mostly weaker on the London Metal exchange on Wednesday, with the Nickel (up 0.5%) and Tin (up 0.2%). Copper fell by 1% on concerns that the US Fed would cut monetary stimulus next week, but falls were limited by tight short-term availability of metal in the physical market. And the gold price fell for the second consecutive session. Comex gold futures lost US$3.20 or 0.3% to US$1,238.60 per ounce. The iron ore price rose by US30c to US$123.50 a tonne.

Ahead: In Australia, detailed labour market data is released. In the US, existing home sales is expected.

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