Australian Stock Market Report - Morning

The International Monetary Fund has upgraded its forecasts for global growth, now expecting the world economy to grow by 3.9pct in 2010, up from the previous estimate of 3.1pct.

European shares rose for the first day in four on Tuesday with investors comforted by positive earnings results. Shares in drugmaker Novartis rose by 2.1pct after reporting a 54pct lift in December quarter earnings while industrial company Siemens lifted 5.1pct after posting higher earnings. The FTSEurofirst index rose by 0.4pct, while the German Dax was up 0.7pct and the UK FTSE rose by 0.3pct.

US sharemarkets weakened in the last 30 minutes of trade dragged down by financial stocks. Stocks had been higher earlier on Tuesday with investors encouraged by consumer confidence data and earnings results from Apple and Travelers Cos. So far 118 S&P 500 companies have reported results and 80pct have beaten earnings forecasts with 65pct beating analyst forecasts for revenues. At the close, the US Dow Jones index was lower by 2.5 points or less than 0.1pct with the S&P 500 down 0.4pct and the Nasdaq lower by 7pts or 0.3pct. 

US treasuries were firmer on Tuesday (yields lower). While economic data was mixed, equities lost ground late in the day. But investors weren´t keen to drive prices too far ahead of the Federal Reserve rate decision . US 2yr yields were down 1pt to 0.81pct with US 10yr yields lower by 2pts to 3.61pct.

Major currencies lifted against the greenback during US trade on Tuesday. The Euro lifted from lows around US$1.4045 to near session highs of US$1.4110, holding near US$1.4070 in late US trade. The Aussie dollar lifted from lows near US89.40c to highs near US90.25c, trading around US89.85c in late US trade. And the Japanese yen held between 89.30 yen per US dollar to JPY90.30, hovering near JPY89.60 in late US trade. 

US crude oil prices eased modestly on Tuesday after investors digested a bevy of economic data. After lifting US72c on Monday, the Nymex crude oil contract fell by 55c or 0.7pct on Tuesday to US$74.71. London Brent crude fell by US40c to US$73.29 a barrel.

Base metal prices were mixed on the London Metal Exchange for a second day on Tuesday. On Monday prices held between gains of 1.0pct and losses of 0.8pct. On Tuesday, nickel rose 0.2pct and zinc fell by 0.1pct while other metals fell by around 1.0pct. But the price of gold rose for a second day with Comex quote higher by US$2.60 an ounce or 0.2pct to US$1,098.30.

Ahead: In Australia the December quarter consumer price index is released. In the US new home sales data is released and the Federal Reserve announces its rates decision.