US financial markets were closed for Martin Luther King Jr Day.
Chinese shares slumped on Monday, recording the biggest daily drop since June 2008. The Shanghai Composite index slumped by 7.7 per cent after regulators imposed curbs on margin trading on three major brokerages. Reuters also reported that "China's banking regulator issued draft rules on Monday to tighten supervision of entrusted loans, a kind of shadow banking product."
European shares rose on Monday, hitting seven-year highs, on expectations that the European Central Bank will unveil fresh stimulus measures at a meeting on Thursday. The FTSEurofirst 300 index rose by 0.2 per cent with the German Dax up by 0.7 per cent to record highs and the UK FTSE lifted by 0.5 per cent. The Swiss sharemarket clawed back some losses, rising by 3.2 per cent. But in London trade shares in miners fell in response to lower metal prices with BHP Billiton down by 1.4 per cent while Rio Tinto lost 1.1 per cent.
Last week US sharemarkets fell with the Dow Jones down by 1.3 per cent, the S&P 500 lost 1.2 per cent and the Nasdaq fell by 1.5 per cent.
US treasuries rose last week (yields fell). Over the week US two-year yields fell by 6 points and US 10-year yields fell by 8 points.
Major currencies were generally firmer against the greenback in European and North American trade on Monday. The Euro rose from lows near $US1.1550 to highs near $US1.1640 and was around $US1.1610 in late North American trade. The Aussie dollar held between US81.95c and US82.30c and was near US82.05c in late North American trade. And the Japanese yen strengthened from 116.94 yen per US dollar to ¥117.58 and was near ¥117.53 in late North American trade.
World oil prices fell on Monday on concerns about the health of the Chinese economy. Reuters quoted the Chinese Premier Li Keqiang as saying on state radio that the economy faces significant downward pressure this year. Brent crude fell by $US1.37 or 2.7 per cent to $US48.80 a barrel while the US Nymex crude price fell by $US1.17 or 2.4 per cent to $US47.52 a barrel.
Base metal prices were lower by up to 2.1 per cent on the London Metal Exchange on Monday with nickel leading the declines, although lead rose by 0.2 per cent. Gold was little changed on Monday near $US1,277 per ounce. Iron ore fell by 20c a tonne on Monday to US67.80 a tonne.
Ahead: In Australia, weekly consumer confidence data is released. Chinese economic data is released including economic growth, retail sales, production and investment. In the US, weekly retail sales data is released with the National Association of Home Builders index.
Craig James is chief economist with CommSec.