Australian Stock Market Report – Morning January 8, 2015

* In US economic data, the trade deficit improved from a deficit of US$42.25 billion in October to US$39bn in November. The ADP employment survey showed that 241,000 private sector jobs were created in December, above forecasts for a 226,000 gain. And new home loans rose 11.1% in the past week with refinance transactions up 16%.

* Minutes of the last Federal Reserve meeting were released - the meeting that indicated that the Fed would be "patient" in lifting rates. Most participants thought reference to "patience" would signal that rate hikes wouldn't begin for the next couple of meetings. Fed members believed that the net effect of the oil price decline would be positive for economic activity.

* European shares rose on Wednesday after weak inflation data raised the chances of stimulus from the European Central Bank. Euro zone consumer prices were 0.2% lower in December than a year ago. The FTSEurofirst 300 index rose by 0.5% with the German Dax also up 0.5% and the UK FTSE rose by 0.8%. In London trade shares in BHP Billiton rose by 1.3% while Rio Tinto gained 0.6%.

* US sharemarkets rebounded on Wednesday. Investors were encouraged by jobs data and strong retail sales results. Shares in JC Penney rose by 20.3% after reporting solid holiday sales. At the close of trade, the Dow Jones was up by 213 points or 1.2%. The S&P 500 index was up by 1.2% and the Nasdaq was up by almost

58 points or 1.3%.

* US longer-term treasuries fell on Wednesday (yields higher). Economic data was stronger-than-expected and investors shifted from Treasuries to equities. US 2 year yields fell by 2 points to 0.613% while US 10 year yields rose by 2pts to 1.96%.

* Major currencies were mixed against the greenback in European and US trade on Wednesday. The Euro fell from highs near US$1.1890 to lows near US$1.1800, and was around US$1.1835 in afternoon US trade. The Aussie dollar fell from highs near US80.80c to lows around US80.35c and was back trading near US80.65c in afternoon US trade. And the Japanese yen weakened from 118.67 yen per US dollar to JPY119.63 before settling near JPY119.07 in afternoon US trade.

* World oil prices were higher on Wednesday. Brent crude rose by US5c or 0.1% to US$51.15 a barrel while the US Nymex crude price rose by US72c or 1.5% to US$48.65 a barrel

* Base metal prices were mixed on the London Metal Exchange on Wednesday. Nickel rose 1.9% but zinc lost 1.9% and other metals rose or fell less than 0.6%. Gold fell on Wednesday in response to a stronger greenback and withdrawal of investors from safe-haven assets. The Comex gold futures price fell by US$8.70 an ounce or

0.7% to US$1,210.70 per ounce. Iron ore fell by US20c to US$70.90 a tonne on Wednesday.

Ahead: In Australia, building approvals data is released. In the US, consumer credit, weekly jobless claims and the Challenger job layoff series is released.

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