Jan 21, 2014

Morning Market Report

A quiet day on the markets thanks to a public holiday in the US.

  • The market is down 2.2 points. The US markets were closed yesterday for the Martin Luther King Jr public holiday.
  • Oil was down 0.65% at US$93.72.
  • Gold rose $2.20 to US$1254.10 per ounce.
  • The US$ was weaker against most major currencies. The Aussie dollar was stronger and is currently trading at US88.02c.
  • US treasury markets were closed. 
  • European shares were generally weaker — the UK FTSE rose 0.11% but the German DAX fell 0.28% and the French CAC was down 0.11%.
  • European bonds were stronger — the yield on the Euro 10 year fell two basis points 1.734%. The French and German yields fell 2 basis points to 2.178% and 1.734% respectively. The UK 10 year bond yield was unchanged at 2.828%.
  • Base metal prices were weaker — nickel fell 1.01%, aluminium fell 0.98% and copper was down 0.19%.
  • Iron ore was down US$2.50 at US$124.80 a tonne.


  • Chinese GDP number yesterday at 7.7% (Est 7.6%) was well received — The A$ jumped half a cent and the BHP share price rose marginally from 3780c to 3800c.
  • European markets upset a bit by Deutsche Bank results which came in below expectations with a tough outlook statement (back on budget by 2015) — they fell 5.4% last night in Germany.
  • No economic data today in Australia or in the US tonight.
  • Interest rates bottoming — The NAB dropped its three and four year fixed rate loan rates to the lowest in 20 years to try and compete in an active area of the mortgage market as Australians bet that the “low is in” on Australian interest rates. Interestingly, small lenders market share in the fixed loans space is up from 14% to 38% in a year. One of my predictions for this year is that we have seen the global low in interest rates. They may not rise officially in Australia but globally they are beginning to anticipate a carefully managed global economic recovery.
  • Stick with the housing stocks — Master Builders Australia predicts a “strong improvement in residential building in the next three years”.
  • SMSFs own 16% of the Australian equity market ($240 billion).
  • Share market fully valued — While delivering a 3.7% increase in profit for the half year to $137 million. Australian Foundation Investment Company (AFIC) said Australian equities look fully valued considering the economy is slowing. They referred to falling investment in the mining sector, fiscal tightening and low consumer and business confidence as holding the economy back. The AFIC Results were boosted by the de-merger dividends of $11 million from received from Amcor and Brambles.
  • Sandfire Resources (SFR) quarterly production report today.

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