Scoreboard: China doubts

Markets on both sides of the Atlantic fell as investors fretted about a slowing Chinese economy, while base metals were corroded once again.

In US economic data, existing home sales fell by 1.8 per cent to a 5.05 million annualised rate in August, short of forecasts tipping sales near 5.20 million. And the national activity index fell from 0.39 to minus 0.21 in August.

The Group of 20 finance ministers say that they are close to the goal of introducing measures designed to boost global economic growth by 2 percentage points by 2018.

European shares fell on Monday on fears of slower global economic growth. Shares in UK retailer Tesco slumped 11.6 per cent after slashing its earnings forecasts. The FTSEurofirst 300 index fell by 0.6 per cent, further retreating from the highest levels in more than six years. The German Dax fell by 0.5 per cent while the UK FTSE lost 0.9 per cent. And Australia's major miners were sharply lower in London trade, with shares in BHP Billiton down by 3.5 per cent while Rio Tinto lost 3.8 per cent.

US sharemarkets weakened in line with other global sharemarkets on Monday. Investors fretted about the health of the Chinese economy and how aggressive the US Federal Reserve will be in lifting interest rates in 2015. And a fall in existing home sales weighed on housing stocks. The Dow Jones index fell by 107 points or 0.6 per cent. The broader S&P 500 index fell by 0.8 per cent while the Nasdaq lost 52 points or 1.1 per cent.

US long-term treasury prices rose again on Monday (yields lower) after the Chinese finance minister indicated that the country wouldn't rush to stimulate growth. US 2-year yields were down 1 point to 0.549 per cent while US 10-year yields were down by 1 point to 2.564 per cent.

Major currencies were weaker against the greenback over the European and US sessions on Monday but finished off the lows. The Euro fell from highs near $US1.2865 to around $US1.2815, ending US trade near the $US1.2845. The Australian dollar fell from highs near US89.15c to lows around US88.55c before ending the US session near US88.75c. But the Japanese yen weakened from 108.78 yen per US dollar to ¥109.15, before reversing course and ending US trade near ¥108.78.

World oil prices were lower on Monday in response to ample world oil supplies, concerns about a prolonged slowdown of the Chinese economy and a stronger greenback. Brent crude fell by $US1.42 or 1.4 per cent to $US96.97 a barrel with the US Nymex price down by US89c a barrel or 1.0 per cent to $US91.52 a barrel.

Base metal prices were lower on Monday, falling up to 4.2 per cent, led by nickel. But aluminium prices were unchanged. Gold prices edged above 9-month lows on Monday with the Comex gold futures quote higher by $US1.30 an ounce or 0.6 per cent to $US1,217.90 per ounce. Iron ore fell by $US1.90 or 2.4 per cent on Friday to $US79.80 a tonne.

Ahead: In Australia, weekly consumer confidence data is released. In the US, Europe and China, "flash" manufacturing gauges are released. In the US, the Richmond Fed index is released with the monthly home price index and weekly chain store sales.

Craig James is chief economist at Commsec.

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