Scoreboard: Data drag

Wall Street eased on soft economic data out of China and Japan, while European shares fell on news of Italy’s credit downgrade.

In US economic data, the employment trends index rose from 122.8 to 123.24 in November.

European shares fell on Monday with a credit downgrade for Italy weighing on sentiment. S&P downgraded Italy from BBB to BBB-, one notch above junk. Economic data in China and Japan was also soft, while lower oil prices weighed on the energy sector. The FTSEurofirst 300 index was down by 0.7 per cent with the German Dax lower by 0.7 per cent while the UK lost 1.1 per cent. In London trade shares in BHP Billiton fell by 2.5 per cent while Rio Tinto eased 0.5 per cent. 

US sharemarkets fell on Monday with investors choosing to book profits in response to soft economic data out of China and Japan. And lower oil prices weighed on the energy sector. At the close of trade, the Dow Jones was lower by 106 points or 0.6 per cent, after being down by 153 points. The S&P 500 index fell by 0.7 per cent, while the Nasdaq eased by 40 points or 0.8 per cent.

US long-term treasuries rose on Monday (yields lower). The US sharemarket was lower, driving some buying from bargain hunters. The expectation is that lower oil prices will restrain inflation, while economic data in the US and Japan was soft. US two-year yields were flat near 0.64 per cent while US 10-year yields fell by 5 points to 2.26 per cent.

Major currencies were generally firmer against the greenback in European and US trade on Monday. The Euro lifted from lows near $US1.2250 to around $US1.2335 and was near $US1.2320 in late US trade. The Aussie dollar rose from lows near US82.60c to around US83.15c and was around US82.95c in late US trade. And the Japanese yen strengthened from 121.51 yen per US dollar to ¥120.33 and was near ¥120.49 in late US trade.

World oil prices fell again on Monday on expectation that any recovery in prices is some way off. Reuters reported the chief executive of Kuwait's national oil company as saying that oil prices were likely to remain around $65 a barrel for the next six to seven months. Brent crude fell by $US2.88 or 4.2 per cent to $US66.19 a barrel. US Nymex crude price fell by $US2.79 or 4.2 per cent to $US63.05 a barrel.

Base metal prices fell by up to 1.4 per cent on the London Metal Exchange on Monday with aluminium leading the declines. But lead fell by just 0.2 per cent while tin bucked the trend, rising by 1.3 per cent. Gold rose on Monday in response to a weaker greenback and safe-haven buying. The Comex gold futures price was up by $US4.50 an ounce or 0.4 per cent to $US1,194.90 per ounce. Iron ore fell by $US1.20 to $US69.70 a tonne on Monday.

Ahead: In Australia the NAB business survey is released together with weekly consumer sentiment data. In the US, wholesale sales/inventories data is due with JOLTS job openings and weekly chain store sales data.

Craig James is chief economist of CommSec.

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