Australian Stock Market Report - Morning

On Christmas Day the People´s Bank of China lifted benchmark interest rates by 25 basis points. The lending rate increased to 5.81pct with the deposit rate lifted to 2.75pct.

US consumer confidence slipped to 52.5 in December from 54.3 and was below forecasts for a result near 56.0. But the Richmond Fed manufacturing index rose sharply in December, lifting from +9 to +25. The services index jumped from +7 to +21. And the 20-city S&P/Case-Shiller home price index fell by 0.8pct in unadjusted terms in October to be 0.8pct lower than a year ago.

US retail spending continued to improve in the latest week. The Johnson Redbook Retail Sales Index - covering 9,000 stores - rose 0.4pct in the week to December 25 to be up 4.6pct on a year ago.

European shares rose modestly in thin trade on Tuesday. The FTSEurofirst index rose by 0.3pct, with the German Dax up just 1.4 points or less than 0.1pct. On Friday the FTSEurofirst index rose by 0.1pct before easing 0.8pct on Monday. The UK market re-opens on Wednesday.

US blue-chip shares were modestly higher on Tuesday after slipping on Monday. At the close, the Dow Jones was higher by 20pts or 0.2pct with the S&P 500 up 0.1pct but the Nasdaq was weaker by 4pts or 0.2pct.

US treasuries slumped on Tuesday (yields higher) in response to a weak auction of five-year notes and generally firmer economic data. US 2yr yields rose by 10pts to 0.75pct while US 10yr yields rose by 15pts to 3.49pct. On Monday US 2yr yields fell 2pts while US 10yr yields lost 5pts.

Major currencies lost ground against the greenback in US trade on Tuesday. The Euro fell from highs near US$1.3275 to US$1.3095, ending US trade near US$1.3115. The Aussie dollar fell from a seven week high of US101.54c to US100.85c, and was trading near US100.95c in late US trade. And the Japanese yen strengthened from 82.50 yen per US dollar to JPY81.85 in European trade before easing to JPY82.45 in late US trade.

US crude oil prices have hovered between US$91.00-92.00 a barrel over the last few days. The Nymex crude oil contract closed at US$91.63 a barrel on Thursday, didn´t trade on Friday, weakened to US$91 on Monday and lifted US49c to US$91.49 a barrel on Tuesday. Cold weather in Europe and the US is serving to support prices.

Base metal prices finished mixed on the London Metal Exchange on Christmas Eve. Nickel rose 2.3pct and copper and zinc rose around 0.5pct but aluminium and lead lost around 0.8pct. Trading resumes on Wednesday. The Comex gold futures price lifted by US$24.00 an ounce on Tuesday to US$1,406.90.
Ahead: In Australia no economic data is released. In the US the weekly mortgage market index is issued.