Australian Stock Market Report – Morning January 19, 2015

A trader works on the floor of the New York Stock Exchange July 17, 2014. U.S. stocks fell sharply lower on Thursday, with the S&P 500 posting its biggest one-day percentage drop since April 10 on news that a Malaysian Airlines passenger jet crashed near the Ukraine-Russia border. The Dow Jones industrial average fell 161.39 points or 0.94 percent, to end at 16,976.81. REUTERS/Brendan McDermid Reuters/Brendan McDermid

* In US economic data, consumer sentiment rose to 11-year highs in January, up from 93.6 to 98.2. Industrial production fell by 0.1% in December (forecast: flat). Consumer prices fell by 0.4% as expected in December but the core measure (excludes food and energy) was flat.

* European shares rose on Friday on hopes that the European Central Bank will start a bond buying program on Thursday. The FTSEurofirst 300 index rose by 1.0% with the German Dax up by 1.4% to record highs and the UK FTSE lifted by 0.8%. But the Swiss sharemarket lost 6%. In London trade shares in BHP Billiton rose by

3.0% while Rio Tinto gained 1.6%.

* US sharemarkets rose on Friday with investors encouraged by consumer sentiment data. The energy sector rose in response to higher oil prices. The Dow Jones rose by almost 191 points or 1.1%, the S&P 500 index was up by 1.3% and the Nasdaq gained 63.5 points or 1.5%. Over the week the Dow lost 1.3%, the S&P 500 lost 1.2% and the Nasdaq fell by 1.5%.

* US treasuries fell on Friday (yields rose) in response to stronger equities and commodity prices and encouraging economic data. US 2 year yields rose by 7 points to 0.488% while US 10 year yields rose by 11 points to 1.83%. Over the week US 2 year yields fell by 6 points and US 10 year yields fell by 8 points.

* Major currencies were generally softer against the greenback in European and US trade on Friday. The Euro fell from highs near US$1.1650 to lows near US$1.1460 and was around US$1.1565 at the US close. The Aussie dollar fell from highs near US82.35c to lows around US81.70c but rebounded to US82.25c at the US close. And the Japanese yen eased from 116.25 yen per US dollar to JPY117.23 and was near JPY117.61 at the US close.

* World oil prices rose on Friday. Traders cited factors such as rising US consumer sentiment, short-covering ahead of Nymex contract expiry, a report by the International Energy Agency pointing to signs of lower crude production and new measures to support lending in China. Brent crude rose by US$1.90 or 3.9% to US$50.17 a barrel while the US Nymex crude price rose by US$2.44 or 5.3% to US$48.69 a barrel. Over the week Brent rose by 6c and Nymex rose by 33c.

* Base metal prices were higher by up to 4.4% on the London Metal Exchange on Friday with lead rising the most while tin edged up just 0.1%. Over the week metals fell by up to 6.5% (copper) but aluminum rose by 2.8%. Gold rose to a 4-month high on Friday, with the Comex gold futures price up by US$12.10 an ounce or 1.0% to US$1,276.90 per ounce. Over the week gold rose by US$60.80 or 5.0%. Iron ore was steady at US$68.00 a tonne on Friday but fell US$1.80 over the week.

Ahead: In Australia, the CommSec State of the States report is released. The monthly inflation gauge is issued with data on new car sales. In the US, markets are closed for Martin Luther King Day.

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