The European Central Bank has announced a quantitative easing program (bond buying). From March, the ECB will buy bonds totalling €60 billion a month. The total program is €1.1 trillion and is expected to end in September 2016.
In US economic data, new claims for unemployment insurance fell from 317,000 to 307,000 in the latest week. Home prices rose 0.8 per cent in November with the annual growth rate lifting from 4.5 per cent to 5.3 per cent.
European shares rose for the sixth day on Thursday in response to the ECB bond-buying package. The FTSEurofirst 300 index rose by 1.6 per cent to 7-year highs with the German Dax up by 1.3 per cent to record highs and the UK FTSE lifted by 1.0 per cent. In London trade mining shares rose with BHP Billiton up by 1.8 per cent while Rio Tinto gained 1.4 per cent.
US sharemarkets rose on Thursday as investors applauded efforts to lift the European economy. Investors also digested mixed earnings results. With an hour of trade to go the Dow Jones was up by 241 points or 1.4 per cent with the S&P 500 index up by 1.3 per cent and the Nasdaq was up by 65 points or 1.4 per cent.
US long-term treasuries fell on Thursday (yields higher) as investors were comforted by news of the ECB bond-buying program. US 2-year yields was steady near 0.524 per cent while US 10-year yields rose by 2 points to 1.89 per cent.
Major currencies fell against the greenback in European and US trade on Thursday. The euro fell from highs near $US1.1640 to lows near $US1.1360 and was near $US1.1385 in afternoon US trade. The Aussie dollar fell from highs near US81.35c to lows around US80.60c and was near the lows in afternoon US trade. And the Japanese yen held between ¥117.27 per US dollar and ¥118.31 and was near ¥118.32 in afternoon US trade.
World oil prices fell on Thursday after the Energy Information Administration announced the largest weekly increase in crude oil stocks in 14 years. According to the EIA, crude stocks rose by 10.1 million barrels to a total of 397.9 million, the highest level for this time of year in at least 80 years. Brent fell by US51c or 1.0 per cent to $US48.52 a barrel while the US Nymex crude price fell by $US1.47 or 3.1 per cent to $US46.31 a barrel.
Base metal prices were generally lower by up to 1.8 per cent on Thursday with copper leading the falls. But tin rose 0.7 per cent and zinc was flat. Gold lifted to 5-month highs on Thursday, with the Comex gold futures price up by $US7.00 an ounce to $US1,300.70 per ounce. Iron ore fell by US20c to $US66.30 a tonne on Thursday.
Ahead: In Australia, no major data is released. In China the flash manufacturing gauge is released. In the US, the leading index is released together with existing home sales and the flash manufacturing gauge. The Greek election is held on Sunday.
Craig James is chief economist at CommSec.