The Australian sharemarket is expected to get off to a strong start following gains in European and US sharemarkets along with oil and gold prices. At the open, the futures market is tipping a 76 point rise of the ASX 200, or a gain of 1.4 per cent.
In US economic data, consumer sentiment rose to 11-year highs in January, up from 93.6 to 98.2. Industrial production fell by 0.1 per cent in December (forecast: flat). Consumer prices fell by 0.4 per cent as expected in December but the core measure (excludes food and energy) was flat.
European shares rose on Friday on hopes that the European Central Bank will start a bond buying program on Thursday. The FTSEurofirst 300 index rose by 1.0 per cent with the German Dax up by 1.4 per cent to record highs and the UK FTSE lifted by 0.8 per cent. But the Swiss sharemarket lost 6 per cent. In London trade shares in BHP Billiton rose by 3.0 per cent while Rio Tinto gained 1.6 per cent.
US sharemarkets rose on Friday with investors encouraged by consumer sentiment data. The energy sector rose in response to higher oil prices. The Dow Jones rose by almost 191 points or 1.1 per cent, the S&P 500 index was up by 1.3 per cent and the Nasdaq gained 63.5 points or 1.5 per cent. Over the week the Dow lost 1.3 per cent, the S&P 500 lost 1.2 per cent and the Nasdaq fell by 1.5 per cent.
US treasuries fell on Friday (yields rose) in response to stronger equities and commodity prices and encouraging economic data. US two-year yields rose by 7 points to 0.488 per cent while US 10-year yields rose by 11 points to 1.83 per cent. Over the week US two-year yields fell by 6 points and US 10 year yields fell by 8 points.
Major currencies were generally softer against the greenback in European and US trade on Friday. The Euro fell from highs near $US1.1650 to lows near $US1.1460 and was around $US1.1565 at the US close. The Aussie dollar fell from highs near US82.35c to lows around US81.70c but rebounded to US82.25c at the US close. And the Japanese yen eased from 116.25 yen per US dollar to ¥117.23 and was near ¥117.61 at the US close.
World oil prices rose on Friday. Traders cited factors such as rising US consumer sentiment, short-covering ahead of Nymex contract expiry, a report by the International Energy Agency pointing to signs of lower crude production and new measures to support lending in China. Brent crude rose by $US1.90 or 3.9 per cent to $US50.17 a barrel while the US Nymex crude price rose by $US2.44 or 5.3 per cent to $US48.69 a barrel. Over the week Brent rose by 6c and Nymex rose by 33c.
Base metal prices were higher by up to 4.4 per cent on the London Metal Exchange on Friday with lead rising the most while tin edged up just 0.1 per cent. Over the week metals fell by up to 6.5 per cent (copper) but aluminum rose by 2.8 per cent. Gold rose to a four-month high on Friday, with the Comex gold futures price up by $US12.10 an ounce or 1.0 per cent to $US1,276.90 per ounce. Over the week, gold rose by $US60.80 or 5.0 per cent. Iron ore was steady at $US68.00 a tonne on Friday but fell $US1.80 over the week.
Ahead: In Australia, the CommSec State of the States report is released. The monthly inflation gauge is issued along with data on new car sales. In the US, markets are closed for Martin Luther King Day.
Craig James is chief economist with CommSec.