Scoreboard: Europe stumbles

In the US, durable goods orders fell by 1.1 per cent in September with factory orders down by 0.6 per cent, in line with forecasts. The trade deficit widened from $US40.1 billion to $US43.03 billion in September (forecast $US40 billion). The ISM New York index rose from 654.8 to 657.2 in October. And chain store sales were up 3.9 per cent on a year ago in the latest week, down from 4.4 per cent in the previous week.

European shares fell on Tuesday on reports of divisions in the European Central Bank and challenges to the management style of bank president Mario Draghi. The European Commission also cut growth forecasts, now tipping 1.1 per cent growth in 2015, down from 1.7 per cent. The FTSEurofirst 300 index fell by 1.0 per cent, the UK FTSE lost 0.5 per cent and the German Dax fell by 0.9 per cent. In London trade, shares in BHP Billiton were flat with Rio Tinto down 0.4 per cent.

US sharemarkets continue to track broadly sideways to slightly lower. Lower oil prices weighed on the energy sector but boosted airline stocks. And many investors chose to stay on the sidelines ahead of jobs data to be released on Friday. With an hour of trade to go, the Dow Jones was up by 8 points or 0.1 per cent. The S&P 500 index was down by 0.4 per cent while the Nasdaq was lower by 20 points or 0.4 per cent.

US treasury prices rose modestly on Tuesday (yields lower) in response to weaker equities markets and mixed economic data. Investors also focussed on the deflationary effects of lower oil prices. US two-year yields were down 1 point to 0.518 per cent while US 10-year yields were down 1 point to 2.339 per cent.

Major currencies were mixed against the US dollar in European and US trade on Tuesday. The Euro rose from lows near $US1.2500 to highs near $US1.2575, and was near $US1.2555 in late US trade. The Aussie dollar held broadly between US87.00c and US87.50c, and was near US87.40c in late US trade. The Japanese yen held between 113.16 yen per US dollar and ¥113.72 and was near ¥113.53 in late US trade.

World oil prices fell to multi-year lows on Tuesday. The stronger US dollar made oil more expensive for buyers in Europe and Asia while investors responded to news that Saudi Arabia was cutting export prices to US buyers. Brent crude fell by $US1.96 or 2.3 per cent to 4-year lows of $US82.82 a barrel. US Nymex crude price fell by $US1.59 or 2.0 per cent to 3-year lows of $US77.19 a barrel.

Base metal prices fell up to 3 per cent on the London Metal Exchange on Tuesday with nickel leading the declines although aluminium lost just 0.7 per cent. Gold eased to fresh 4-year lows on Tuesday with Comex gold futures down by $US2.10 an ounce or 0.2 per cent to $US1,167.70 per ounce. Iron ore fell by US70c on Tuesday or 0.9 per cent to $US77.10 a tonne.

Ahead: In Australia, car sales data is released. CBA releases its quarterly update. In the US, the ADP employment survey is released with the ISM services index. In China the HSBC services index is issued.

Craig James is chief economist at CommSec.