Mixed signals from world markets

Share Markets:

European and US markets moved in opposite directions overnight.

European markets were pushed higher by the positive impact of lower oil and by renewed interest in the pharmaceutical sector.

The FTSE100 was flat, however the Dax rose 1.4% and the French CAC40 index was up 1.2%.

In the US, the Dow fell 0.5% and the S&P500 was down 0.8%. US markets reacted badly to further weakening in the price of oil.

The energy sector has been a source of US growth over the past two years.

Interest Rates: 

Weaker oil prices suggest US inflation will remain lower for longer and may delay an increase in US interest rates.

US 10 year government bond yields fell further overnight, declining four basis points to 1.91%.

Two year government bond yields moved marginally lower to 0.55%.

In Australia, 10 year government bond yields fell three basis points to 2.69% while three year bond yields fell two basis points to 2.14%.

Foreign Exchange: 

The AUD moved lower against the USD overnight with weaker commodity prices causing concerns for holders of AUD.

Demand for yen was stronger on the back of that nation's gains from lower energy prices. The US dollar index was modestly firmer overnight.


Oil prices fell a further 5% overnight on modest demand and excess supply.

At the height of the GFC, West Texas intermediate crude oil fell to US$44 per barrel, however the mix of global economic conditions is markedly different today.

Gold advanced while copper slipped on concerns regarding global economic growth.


ANZ job ads rose 1.8% in December, the seventh consecutive monthly increase.

Annual growth picked up to 11.4%, the first double-digit pace since April 2011.

The steady improvement in job ads has continued to diverge with subdued labour market conditions in the ABS statistics and weak domestic demand in the economy.

Job ads continue to suggest that labour market conditions will improve.

Owner occupier demand lost further ground in November.

The number of owner occupier loans declined 0.7% in November.

However, if the refinancing of loans is excluded, the number of new owner occupier loans fell 0.8%, following a 1.3% decline in October.

For the year to November the number of new owner occupier loans (i.e. excluding refinancing) fell 5.5%, its weakest annual pace in nearly four years.

Demand for loans remains at an elevated level but the pace of growth has turned negative. Investor housing loans fell for the first time in six months, possibly in response to rising house and unit prices.

The value of investor loans fell 2.2% in the month but was still up 13.0% on a year earlier.


No significant data released.


French business confidence slipped a point to 96 in the Banque de France's December survey, ending the year two points lower than it ended 2013.

That year, the economy averaged 0.2 % growth per quarter; whereas in 2014 in the three quarters for which data are available, growth averaged just a third of 2013's modest pace (i.e. 0.07%).

The only reason unemployment has not moved much higher than 10% in France over the past year is that despite weak growth, firms cannot easily lay off workers.

As a result, they don't hire them either: jobs have not recorded positive growth in France since Q3 2011.

New Zealand:

No significant data released.

United Kingdom:

No significant data released.

United States: 

The US Fed's labour market conditions index edged up from 5.5 in November to 6.1 in December.

The rise in the index indicates an improvement in the labour market. The index has risen over the past four months.

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