Australian Stock Market Report – Morning August 20, 2014

Retailer — Shoppers look over items on sale at a Macy's store in New York, November 23, 2012. Reuters/Keith Bedford

* In US economic data, both headline and core measures of consumer prices rose just 0.1% in July, just below forecasts. Housing starts rose by 15.7% to a 1.093 million annual rate in July, well above forecasts centred on a result near 969,000. And weekly chain store sales were up 3.7% on a year earlier, down from 4.8% in the previous week.

* European shares rose again on Tuesday. Investors were comforted by stabilisation of the Ukraine crisis and encouraged by US economic data. The FTSEurofirst 300 index rose by 0.6% with the German Dax up 1.0% and UK FTSE lifted by 0.6%. Australia's major miners were mixed in London trade with shares in BHP Billiton down by 4.9% in response to its earnings result while Rio Tinto lifted by 0.1%.

* US sharemarkets rose on Tuesday. A lift in housing starts boosted housing-dependent stocks. And shares in Home Depot soared by 5.6% in response to its earnings result, in turn serving to lift shares in the consumer discretionary sector. Shares in Apple rose 1.4% to $100.53 a share. The Dow Jones index rose by almost 81 points or 0.5% with the S&P 500 index up by 0.5% while the Nasdaq gained 19 points or 0.4% to fresh 14-year highs.

* US treasury prices were little changed on Tuesday. While economic data was positive and sharemarkets were in favour, investors were cautious ahead of a speech by the Federal Reserve chair on Friday. US 2 year yields were flat at 0.43% while US 10 year yields were flat at 2.40%.

* Major currencies ended weaker against the US dollar after European and US sessions on Tuesday. The Euro eased from highs near US$1.3360 to around US$1.3310, before ending US trade near US$1.3320. The Aussie dollar eased from highs near US93.40c to US93.00c before ending the US session close to US93.05c. And the Japanese yen eased from 102.53 yen per US dollar to JPY102.90, ending US trade near the weakest levels.

* World oil prices fell to 14-month lows on Tuesday. The US dollar rose, making commodities more expensive for buyers in Asia and Europe. And world supplies of crude remain plentiful despite a number of geopolitical risks. Brent crude fell by US4 cents to US$101.56 a barrel and the US Nymex price eased by US$1.93 a barrel or 2.0% to US$94.48 a barrel.

* Base metal prices rose by up to 1.1% on Tuesday with lead and zinc up the most. But copper lost 0.6% and tin fell by 0.1%. Gold prices fell again on Tuesday as the US dollar rose with the Comex gold futures quote down by US$2.60 or 0.2% to US$1,296.70 per ounce. Iron ore fell by US30c on Tuesday to US$93.00 a tonne.

Ahead: In Australia, the Reserve Bank Governor gives testimony to the House of Representatives Economics committee. In the US, weekly mortgage finance data is released with the minutes of the last Federal Reserve meeting.

[Kick off your trading day with our newsletter]