Australian Stock Market Report – Morning January 5, 2015

* In US economic data, the ISM manufacturing index eased from 58.7 to 55.5 in December, well below the consensus estimate of 57.6. Construction spending fell by 0.3% in November, below forecasts for a 0.3% gain.

* European shares eased on Friday. The FTSEurofirst 300 index fell by 0.4% with the German Dax down by 0.4% and the UK FTSE down by 0.3%. But Italian, Spanish & Greek markets rose on hopes for stimulus from the European Central Bank. In London trade shares in BHP Billiton lost 0.8% while Rio Tinto fell by 1.0%.

* US sharemarkets were mixed in thin trade on Friday with major indexes closing off session highs. Weaker-than-expected economic data weighed on sentiment. At the close of trade the Dow Jones finished up by almost 10 points or 0.1% after trading higher by 128 points at one stage. The S&P 500 index was down by less than

0.1% and the Nasdaq was down by 9.2 points or 0.2%. For the week the Dow lost 1.2%, the S&P 500 fell by 1.5% and the Nasdaq lost 1.7%.

* US longer-term treasuries rose on Friday (yields lower) in response to weaker-than-expected economic data. US 2 year yields fell by less than 1 point to 0.67% while US 10 year yields fell by 6pts to 2.11%. Over the week US 2 year yields fell by 3.5 points while US 10 year yields fell by 9 points.

* Major currencies fell against the greenback in European and US trade on Friday. The Euro fell from highs near US$1.2065 to lows near US$1.2000, and was around the lows in late US trade. The Aussie dollar fell from highs near US81.45c to lows around US80.80c and was trading near US80.85c in late US trade. This morning the Aussie is near US80.70c. And the Japanese yen fell from 120.42 yen per US dollar to JPY120.74 before strengthening to JPY119.89 and then easing again to end US trade at JPY120.47.

* World oil prices fell on Friday in response to a stronger US dollar and weak US and European economic data. Brent crude fell by US91c or 1.6% to US$56.42 a barrel while the US Nymex crude price fell by US58c or 1.1% to US$52.69 a barrel. Over the week, Brent fell by US$3.03 or 5.1% while Nymex fell by US$2.04 or 3.7%.

* Base metal prices were mixed on the London Metal Exchange on Friday. Lead, zinc and tin rose up to 1.3% while other metals fell up to 2.1%. Over the week, metals were also mixed. Nickel lost 3.3% and tin rose 3.3%. Gold rose on Friday with the Comex gold futures price up by US$2.10 an ounce or 0.2% to US$1,186.20 per ounce. Over the week gold fell by US$9.10 or 0.8%. Iron ore was unchanged at US$71.20 a tonne on Friday. Over the week iron ore rose by US$4.50 or 6.3%.

Ahead: In Australia, the Performance of Manufacturing index is released. In the US, December auto sales data is released.

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