Australian Stock Market Report

The US services sector grew at its fastest pace in more than four years in December. The US ISM services index lifted from 55.0 to 57.1 - the highest result since May 2006. US private employers added 297,000 jobs in December according to the ADP employment report, well above forecasts for an increase of 100,000 jobs. And planned job cuts fell 34pct in December according to a report from Challenger, Gray and Christmas.

According to a report in the China Securities Journal, authorities will let the yuan rise by 5pct against the US dollar in 2011.

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European shares finished mixed on Wednesday. Metal prices eased, weighing on mining stocks. In London trade shares in Rio Tinto fell by 0.6pct with shares in BHP Billiton lower by 0.8pct. But banks and energy companies generally rose. The FTSEurofirst index rose by 0.04pct, with the UK FTSE up 0.5pct but the German Dax was down by 0.5pct.

US sharemarkets rose on Thursday with investors encouraged by solid economic data readings. Financials led the gains. With an hour of trade to go, the Dow Jones was up by 30pts or 0.3pct with the S&P 500 up 0.4pct and the Nasdaq was higher by 15pts or 0.6pct.

US treasuries fell sharply on Wednesday (yields higher) in response to better-than-expected economic data and a firmer sharemarket. US 2yr yields rose by 11pts to 0.73pct and US 10yr yields lifted by 16pts to 3.50pct.

The US dollar remained firm against major currencies in European and US trade on Wednesday. The Euro eased from highs near US$1.3290 to US$1.3125, and was trading near US$1.3145 in late US trade. The Aussie dollar continued to ease in European and US trade. The Aussie fell to as low as US99.60c, but was trading near US100c in late US trade. And the Japanese yen eased from 81.90 yen per US dollar to around JPY83.35 and was near these levels in late US trade.

US crude oil prices rebounded on Wednesday as investors were encouraged by solid US economic data. And inventory data showed that US crude stocks fell by 4.16 million barrels in the latest week - much larger than expected. The Nymex crude oil contract rose by US92c or 1.0pct to US$90.30 a barrel. The Brent futures crude contract rose by US$2.01 to US$95.54. The gap between Brent and Nymex is the biggest in seven months.

Base metal prices generally eased on the London Metal Exchange on Wednesday, the exception being lead, up 2.0pct. Other metals lost between 0.1-1.6pct with nickel recording the biggest drop. But the gold price eased again with further unwinding of safe-haven flows. The Comex gold futures price was down by US$7.00 an ounce to US$1,371.80.

Ahead: In Australia the Performance of Services index is released together with data on building approvals. In the US weekly jobless claims data is released.