Australian Stock Market Report – Morning January 15, 2015

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, retail sales fell by 0.9% in December, well below expectations for a 0.1% fall. Excluding gas stations and autos, sales were down 0.3%. Import prices fell by 2.5% in December and export prices fell by 1.2%.

* The Federal Reserve Beige Book reported that manufacturing and consumer spending expanded in most districts in November and December.

* European shares fell on Wednesday. Investors fretted that US retail sales were weak in December and that the World Bank had trimmed global growth forecasts for 2015. The World Bank tips 3.0% economic growth this year, down from the June 2014 forecast of 3.4%. And mining shares fell in line with lower metal prices. Overall the FTSEurofirst 300 index fell by 1.6% with the German Dax down by 1.3% and the UK FTSE slumped by 2.4%. In London trade shares in BHP Billiton fell by 5.3% while Rio Tinto lost 4.0%.

* US sharemarkets fell on Wednesday but pared losses after the Beige Book release. Retail sales data disappointed, dragging retail stocks lower. Weaker metal prices weighed on miners. And shares in JP Morgan Chase fell by 3.5% after disappointing with earnings results. After being down by 349 points, the Dow Jones ended lower by 187 points or 1.1%. The S&P 500 index fell by 0.6% and the Nasdaq was down by 22 points or 0.5%.

* US treasuries were firmer on Wednesday (yields lower) as weak US economic data and downbeat World Bank forecasts drove investors away from equities and to government bonds. But there was average demand for a $13 billion auction of 30-year bonds. US 2 year yields fell by 5 points to 0.497% while US 10 year yields fell by 5 points to 1.848%.

* Major currencies were mixed against the greenback in European and US trade on Wednesday. The Euro rose from lows near US$1.1725 to highs near US$1.1845 and was around US$1.1790 in afternoon US trade. The Aussie dollar rose from lows near US80.70c to highs around US81.75c and was near US81.50c in afternoon US trade. And the Japanese yen lifted from 117.30 yen per US dollar to JPY116.04 and was near JPY117.27 in afternoon US trade.

* World oil prices lifted late in the session on option expiry and in response to the Federal Reserve Beige Book. Brent crude rose by US$2.10 or 4.5% to US$48.69 a barrel while the US Nymex crude price rose by US$2.59 or 5.6% to US$48.48 a barrel.

* Base metal prices were lower by up to 5.4% on the London Metal Exchange on Wednesday with copper leading the declines although aluminium did best, down just 0.8%. Gold rose, with the Comex gold futures price up by US10c an ounce or less than 0.1% to US$1,234.50 per ounce. Iron ore fell by US10c to US$67.80 a tonne on Wednesday.

Ahead: In Australia, monthly labour market data is released with dwelling starts. In the US, weekly claims for unemployment insurance is released with producer prices and the Philadelphia Federal Reserve survey.

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