Australian Stock Market Report – Morning January 7, 2015

Passersby walk past in front of an electronic board displaying Japan's Nikkei average (top C) and various countries' stock price index outside a brokerage in Tokyo January 6, 2015. Asian shares tumbled on Tuesday as sliding oil prices and political uncertainty in Greece forced investors out of risk assets and into the safety of government bonds. Japan's Nikkei dropped 2.4 percent. All markets in the region were under water with even high-flying mainland Chinese shares, which hit 5-1/2-year highs earlier in the session, pulling back. REUTERS/Issei Kato (JAPAN - Tags: BUSINESS)

* In US economic data, the ISM services index eased from 59.3 to 56.2, below the forecast of 58.0. Factory orders fell 0.7% in November, a slightly larger decline than the 0.5% expected fall. And the Redbook survey of weekly chain store sales was up 4.3% in the latest week compared with a year ago, down from the 5.4% annual gain in the previous week.

* European shares eased again on Tuesday, selling off in late trade. Falling oil prices weighed on energy producers and there were further jitters about the outlook for Greece. The FTSEurofirst 300 index fell by 0.7% with the German Dax flat (down 3.5 points) and the UK FTSE down by 0.8%. In London trade shares in BHP Billiton rose by 0.6% while Rio Tinto rebounded by 2.1%.

* US sharemarkets fell again on Tuesday. Economic data was weaker-than- expected, lower oil prices weighed on energy stocks and investors continued to fret about the European economy. At the close of trade, the Dow Jones was lower by 130 points or 0.8%, after earlier being down 239 points. The S&P 500 index was down by

0.9% and the Nasdaq was down by 60 points or 1.3%.

* US longer-term treasuries rose sharply again on Tuesday (yields lower). Another fall in the oil price and weaker-than-expected economic data prompted buying of Treasuries, especially given further weakness in equities. US 2 year yields fell by 4 points to 0.629% while US 10 year yields fell by 9pts to 1.947%.

* Major currencies were again mixed against the greenback in European and US trade on Tuesday. The Euro fell from highs near US$1.1970 to lows near US$1.1885, and was around US$1.1895 in afternoon US trade. The Aussie dollar fell from highs near US81.55c to lows around US81.00c and was trading near US81.00c in afternoon US trade. And the Japanese yen lifted from 119.38 yen per US dollar to JPY118.06 before settling near JPY118.52 in afternoon US trade.

* World oil prices fell for a fourth straight day on Tuesday. Saudi Arabia has given no signs of cutting production with King Abdullah saying that the country will meet the challenge of low oil prices "with a firm will". Saudi Arabia has also announced oil price discounts for European and US buyers. Brent crude fell by US$2.01 or 3.8% to US$51.10 a barrel while the US Nymex crude price fell by US$2.11 or 4.2% to US$47.93 a barrel

* Base metal prices were generally little-changed on the London Metal Exchange on Tuesday. The exceptions were aluminium (down 1.8%) and tin (up 1.4%). Gold rose on Tuesday as investors continued to embrace safe-haven assets. The Comex gold futures price was up by US$15.40 an ounce or 1.3% to US$1,219.40 per ounce. Iron ore rose by US30c to US$71.10 a tonne on Tuesday.

Ahead: In Australia, the Performance of Services index is released. In the US, trade data is expected together with the ADP employment report and the minutes of the last Federal Reserve meeting

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