Groundhog Day yet again for copper, crude and iron ore overnight with all continuing to slide despite the release of bullish Chinese import data yesterday. Starting with the largest decline first, copper, with 3-month futures tumbling over 4% to a low of $2.586/lb, the lowest level seen since July 2009. Elsewhere trade in crude oil was volatile with WTI and Brent front-month futures falling to as low as $44.20 and 45.19 per barrel before rebounding into the close. While far too early to call a bottom yet, the two-way price action, albeit volatile, suggests renewed demand is emerging at these levels. Closer to Australia the spot iron ore price continued to slip, falling 0.9% to $67.90 d/mt.

The number of US job vacancies continued to surge in November with the Jolts job survey rising to 4.972m. The figure, well above the 4.83m level of October and forecasts for an increase to 4.86m, left total openings at the highest level seen since January 2001. While openings continued to soar the quit rate, a measure on confidence in the labour market to find alternative work as it is voluntary in nature, fell to 2.618m from 2.712m in October. Elsewhere new hires fell to 4.99m from 5.101m while layoffs, workers involuntarily losing their jobs, slid to 1.612m from 1.757m previously.

US small business confidence rose sharply in December with the NFIB index jumping to 100.4. The reading, above the 98.1 level of November, was the highest level seen since October 2006. Eight of ten survey components recorded improvements with gauges on employment, capital spending and sales all rising strongly during the month. Interestingly, the only component to fall was that towards the economic outlook with only 12% of firms expecting further improvement, down from 13% in November.

The US Federal budget recorded a surplus of $2b in December. The reading, below the $53b level of December 2013 and expectations for a surplus of $3b, was a result of receipts rising to $335b as outlays increased by $333b.

UK consumer prices grew at the slowest pace since May 2000 in December with an annual increase of 0.5% reported. The reading, below the 1.0% level of October and expectations for a decline to 0.7%, equalled the lowest level seen in the 25-year history of the survey. While headline inflation cooled, core prices, that which exclude volatile energy and food items, ticked higher, rising 1.3% on year from 1.2% in November. Mirroring the decline in CPI producer prices fell by 0.8%, below the downwardly-revised 0.6% decline of November and forecasts for a drop of 0.4%, with the reading the lowest seen since September 2009. While disinflationary pressures were evident elsewhere house price inflation kept on keeping on with an annual increase of 10% recorded in November. While below the 10.4% pace of October the reading was higher than the 5.4% increase recorded in the year to November 2013.

German wholesale price inflation fell 1% in December, the steepest month-on-month contraction since December 2008. The reading, following a 0.7% drop in November, left the annual decline at 2.3%, a level not seen since November 2009.

Italian industrial output rose 0.3% in November. The increase, the sharpest monthly expansion since June, was higher than both the flat reading of October and expectations for an increase of 0.1%. With the monthly reading topping forecasts and stronger data rolling off the series, the annual contraction improved to 1.8% from 3.0% seen previously. Overall increased output of consumer, investment and intermediate goods offset a 1.5% decline in energy.


The Day Ahead (AEDT)

The ASX 200 looks set to extend its falls this morning with SPI futures pointing to a decline of 15pts on the open. Given the influence commodity futures had on US trade, particularly crude, expect the movements in that space to be highly influential on the ASX today. Should the late rebound in North American trade continue there’s a reasonable chance the market will finish higher despite what SPI futures are suggesting.

The AUDUSD has endured a choppy session overnight with the pair operating between .8125 to .8170 throughout European and North American trade. With no major data scheduled domestically or in Asia movements in crude oil, a quasi-barometer of risk aversion, will likely be influential today. Support kicks in at .8125, .8100 and .8085 with resistance located at .8170, .8200 and again at .8215.

Data releases this evening include retail sales, import prices, business inventories and the latest MBA mortgage market index from the States, CPI figures from France and Italy, Eurozone industrial production along with Indian wholesale price inflation. On the policy front the US Federal Reserve will also release their latest Beige book on economic conditions at 6am tomorrow morning.

US financial heavyweight Wells Fargo will announce Q4 earnings this evening.


Market Map Jan 14 2015


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