In US economic data, the Employment Cost Index, the broadest measure of labour costs, rose 0.7 per cent in the June quarter -- the largest gain in six years. Labour costs were up 2 per cent on a year ago. The ISM Chicago business index fell from 62.6 to 52.6 in July -- a one year low. US jobless claims rose by 23,000 to 302,000 last week.
European shares fell on Thursday, as worries about the Argentina default hurt sentiment. Stocks with exposure to Latin America were hit hard. Spain's IBEX dropped 2.1 per cent. Europe's main volatility index rose 9.4 per cent to a three-month high. Portugal's financial sector was hit hard after disappointing earnings from Banco Espirito Santo (down 42 per cent). German sportswear firm Adidas fell 15.4 per cent after a weak earnings result. The FTSEurofirst 300 index fell by 1.3 per cent with the German Dax down by 1.9 per cent while the UK FTSE lost 0.6 per cent. Australia's major miners were lower in London trade with shares in BHP Billiton down by 0.9 per cent while Rio Tinto fell by 1.2 per cent.
US sharemarkets fell sharply on Thursday as concerns over the Argentina default and tensions in Russia weighed on sentiment. The upcoming non-farm payrolls numbers kept investors on the sidelines. All 10 S&P sectors were lower. The CBOE Volatility Index (VIX) jumped 26.5 per cent. The Dow Jones index fell by 317 points or 1.9 per cent with the S&P 500 index down by 2 per cent while the Nasdaq fell by 93 points or 2.1 per cent.
US treasury prices were mixed on Thursday with investors rebalancing portfolios on the last day of the month. US 2-year yields fell by 3 points to 0.535 per cent while US 10-year yields were up by 1 point to 2.567 per cent.
Major currencies fell against the US dollar on Thursday. The euro fell from highs near $US1.3400 to $US1.3370, before ending US trade near $US1.3385. The Aussie dollar fell from highs near US93.25c to lows near US92.80c before ending the US session near US92.90c. And the Japanese yen traded between 103.00 yen per US dollar to JPY102.75, ending US trade near JPY102.85.
World oil prices fell on Thursday as news of a Kansas refinery shut down is likely to dampen demand for US crude. A Reuter’s survey of OPEC nations found that oil supply averaged 30.06 million barrels per day in July compared with 29.92 million barrels in June. Brent crude fell by US63c or 0.6 per cent to $US105.88 a barrel and the US Nymex price fell by U$2.10 a barrel to $US98.17 a barrel.
Base metal prices fell by up to 2.5 per cent on Thursday with nickel posting the biggest fall followed by aluminium, down 1.6 per cent. Gold prices eased on Thursday. The Comex gold futures price fell by $US13.60 an ounce to $US1,281.30 per ounce. Iron ore fell by US30c a tonne to $US95.60 a tonne.
Ahead: In Australia, data on RPData/Rismark house price data and producer price index for the June quarter are released. In the US, non-farm payrolls are released together with the construction spending and the ISM manufacturing index.
Craig James is the chief economist at Commsec.