Australian Stock Market Report – Morning September 17, 2014

Traders work on the floor of the New York Stock Exchange shortly after the market's opening in New York July 28, 2014. REUTERS/Lucas Jackson

* In US economic data, producer prices were unchanged in August. Excluding food and energy, prices were up 0.1%. Producer prices are up 1.8% on a year ago. Chain store sales were up 3.6% on a year ago, down from the 4.9% annual gain in the previous week.

* European shares were modestly lower on Tuesday as investors awaited the US Federal Reserve interest rate decision and the vote on Scottish independence. The FTSEurofirst 300 index fell by 0.2% with the German Dax down by 0.3% while the UK FTSE fell by 0.2%. Australia's major miners were mixed in London trade with shares in BHP Billiton down by 0.3 per cent and Rio Tinto was down 0.1 per cent.

* US sharemarkets posted solid gains on Tuesday as some investors bet that the Federal Reserve will remain cautious about when the process of increasing interest rates will start in 2015. The Dow Jones index rose by 101 points or 0.6% to finish just short of record highs. The broader S&P 500 index lifted by 0.8% while the Nasdaq gained 34 points or 0.8%.

* US treasury prices rose slightly on Tuesday (yields lower) ahead of the Federal Reserve interest rate decision. US 2 year yields fell by 1 point to 0.54% while US 10 year yields fell by 1 point to 2.594%.

* Major currencies were generally firmer against the greenback over the European and US sessions on Tuesday on rumours that the Chinese central bank will boost stimulus to the top five banks. The Euro rose from lows near US$1.2925 to US$1.2990, before ending US trade near US$1.2960. The Aussie dollar rose from lows near US90c to highs around US91.10c before ending the US session near US90.95c. And the Japanese yen held between 106.83 yen per US dollar and JPY107.32, ending US trade near JPY107.15.

* World oil prices rose on Tuesday. A weaker US dollar boosted the purchasing power of commodity buyers in Asia and Europe. And OPEC Secretary General Abdallah El-Badri told reporters he expected the group to lower its oil output target to 29.5 million barrels per day (bpd) from 30 million bpd when it meets next in late November. Brent crude rose by US$1.17 or 1.2% to US$99.05 a barrel with the US Nymex price up by US$1.96 a barrel or 2.1% to US$94.88 a barrel.

* Base metal prices rose between 0.3-1.9% on Tuesday with aluminium up the most and nickel up the least. Gold prices rose for the second straight day on Tuesday with the Comex gold futures quote higher by US$1.60 an ounce or 0.1% to US$1,236.70 per ounce. Iron ore fell by US70c on Tuesday to US$84.50 a tonne after rising up US$3.20 or 3.8% on Monday.

Ahead: In Australia, no major economic data is released. In the US, the Federal Open Market Committee hands down the interest rate decision. Data on consumer prices and the current account are released with the NAHB Housing Market Index.

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