European shares rose on Monday. Shares in Citigroup rose after releasing solid earnings figures. And fears about the health of the Portuguese banking system continued to ease. The FTSEurofirst 300 index rose by 0.8 per cent with the German Dax higher by 1.2 per cent while the UK FTSE gained 0.8 per cent. Australia's major miners were higher in London trade with shares in BHP Billiton up by 1.6 per cent while Rio Tinto lifted by 1.2 per cent.
US sharemarkets rose on Monday with investors encouraged by Citigroup earnings. Citigroup will also pay the US government $US7 billion to settle a federal investigation into mortgages sold ahead of the global financial crisis, less than the $12bn sought by the government. Shares in Citigroup rose by 3 per cent. The Dow Jones rose sharply at the start of trade before drifting sideways over the session. The Dow Jones index rose by almost 112 points or 0.7 per cent with the S&P 500 index higher by 0.5 per cent while the Nasdaq lifted by 25 points or 0.6 per cent.
US treasury prices fell slightly on Monday (yields higher) as investors drifted away from safe-haven assets to equities. But investors also displayed some caution ahead of testimony by the Federal Reserve chair, Janet Yellen. US 2-year yields were steady near 0.46 per cent while US 10-year yields rose by 2 points to 2.545 per cent.
Major currencies were mixed against the US dollar in the European and US sessions on Monday. The euro fell from lows near $US1.3595 to highs near $US1.3635, closing US trade near $US1.3620. The Aussie dollar eased from highs near US94.05c to lows near US93.83c before ending the US session near US93.95c. And the Japanese yen eased from JPY101.37 per US dollar to JPY101.61, ending US trade near JPY101.55.
World oil prices rose slightly on Monday. While there was renewed violence in Libya that could further serve to delay oil shipments, traders concluded that the market is well supplied with oil at present. Brent crude rose by US32c or 0.3 per cent to $US106.98 a barrel and the US Nymex price rose by US8c a barrel or 0.1 per cent to $US100.91 a barrel.
Base metal prices were reasonably steady on Monday with gains or losses not exceeding 0.7 per cent. Copper was down 0.7 per cent while tin rose by 0.3 per cent. Gold prices fell sharply on reduced economic and geopolitical risks. Trading was 60 per cent above the 30-day daily average. India also indicated that it will retain a 10 per cent tax on gold and silver imports. The Comex gold futures quote fell by $US30.70 or 2.3 per cent to $US1,306.70 per ounce. Iron ore was up $US1.00 a tonne to $US97.90 a tonne on Monday.
Ahead: In Australia, new car sales figures are released. The Reserve Bank releases minutes of the last board meeting. In the US, the Federal Reserve chair, Janet Yellen, starts testimony to Congress. Retail sales data is released together with import and export prices, weekly chain store sales and the New York Federal Reserve manufacturing survey. In China lending data is expected, together with foreign direct investment.
Craig James is chief economist at Commsec