Australian Stock Market Report – Morning 1/29/14

US MORNING REPORT
(8am AEDT)

In US economic news consumer confidence rose from 77.5 to 80.7 in January, above forecasts for a result near 78.1. The S&P/Case Shiller home price index rose 0.9% in November to be up 13.7% on a year ago - the largest gain in eight years. But durable goods orders fell 4.3% in December. Excluding defence equipment and aircraft, orders fell 1.3%. Economists had tipped a 0.5% rise.

European shares rose for the first time in four days in response to a spattering of encouraging news. Of note, Spain´s economy minister lifted the country´s growth forecast, boosting the share prices of Spanish banks. The FTSEurofirst 300 index rose by 0.6% with the UK FTSE up by 0.3% while the German Dax rose by 0.6%. Mining shares were also higher in London trade with BHP Billiton shares up by 1.2% while Rio Tinto lifted by 2.3%.

US blue chip shares rose on Tuesday in response to encouraging data on consumer confidence and home prices. But the imminent Federal Reserve decision, earnings from Apple and data on durable goods orders restrained positive sentiment. Shares in Apple fell by 8% in response to its latest earnings result. At the close of trade, the Dow Jones was higher by almost 91 points or 0.6%. The S&P 500 was up by 0.6% while the Nasdaq was up 14 points or 0.4%.

US long-term treasury prices were little changed on Tuesday ahead of the Federal Reserve decision. US Treasury sold $32 billion of two-year debt and will issue $15 billion in two-year floating rate notes on Wednesday and $35 billion in five-year notes and $29 billion in seven-year debt on Thursday.US 2 year yields eased 1 point to 0.344% while US 10 year yields fell 1 point to 2.746%.

Major currencies largely held in trading ranges as traders awaited the Federal Reserve decision. The Euro held between US$1.3630 and US$1.3685 and was trading near US$1.3670 in afternoon US trade. The Aussie dollar rose from lows near US87.60c to highs near US88.20c, and was near US87.75 in afternoon US trade. And the Japanese yen traded between 102.56 yen per US dollar and JPY103.22 and was trading near 102.88 in afternoon US trade.

World oil prices rose on Tuesday as global equities markets steadied, causing investors to again embrace ´´riskier´´ assets like commodities. al oil demand. Harsh winter weather in the US north-east added to demand for heating oil. Brent crude rose by US72c or 0.7% to US$107.41 a barrel while US Nymex crude rose by US$1.69 or 1.8% to US$97.41 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday. Copper, nickel and zinc fell up to 0.3% while other metals rose up to 1.4% with tin leading the way. The gold price fell as ´´safe-haven´´ flows were trimmed. The Comex gold futures fell by US$12.60 or 1.0% to US$1,250.80 per ounce. The iron ore price fell by US40c to US$123.90 a tonne.

Ahead: In Australia no major economic data is released. In the US, the Federal Reserve hands down its monetary policy decision. The weekly mortgage market index is released.

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