In US economic data, durable goods orders (proxy for business investment) fell by 3.4 per cent in December (forecast 0.5 per cent). Non-defence orders excluding aircraft fell by 0.6 per cent. New home sales rose by 11.6 per cent in December to a 481,000 annual rate (forecast 450,000). Case Shiller home prices rose by 0.7 per cent in November to be 4.3 per cent higher than a year ago, in line with forecasts. Consumer confidence rose from 93.1 to 102.9 in January, well ahead of forecasts of 95.1.
European shares fell for the first time in nine days on Tuesday. The FTSEurofirst 300 index fell by 0.8 per cent from seven-year highs largely on concerns about how discussions between the new Greek government and its lenders will pan out. The German Dax fell by 1.6 per cent, reversing Monday's gain, and the UK FTSE fell by 0.6 per cent. Mining shares fell in London in response to lower metal prices, with BHP Billiton down by 1.0 per cent while Rio Tinto lost 0.5 per cent.
US sharemarkets fell sharply at the start of trade on a raft of concerns such as Greek debt, lower business spending, the impact of a strong US dollar on corporate earnings and the impending Federal Reserve decision. Shares in Microsoft fell by 9 per cent in response to its earnings result. A blizzard in the north-east crimped trading volumes. After being down 390 points, the Dow Jones finished trade lower by 291 points or 1.6 per cent. The S&P 500 index was down by 1.3 per cent and the Nasdaq lost 90 points or 1.9 per cent.
US long-term treasury prices were firmer (yields lower) on Tuesday as investors trimmed positions in equities in favour of bonds in response to weak business spending data. US two-year yields fell by 1 point to 0.51 per cent while US 10-year yields were down by 1 point to 1.823 per cent.
Major currencies largely rose against the greenback in European and US trade on Tuesday. The euro rose from lows near $US1.1225 to highs near $US1.1420 but eased to near $US1.1365 in afternoon US trade. The Aussie dollar rose from lows near US79.15c to highs around US79.70c but was back near US79.30c in afternoon US trade. And the Japanese yen rose from 118.30 yen per US dollar to ¥117.34 but was back near ¥117.87 in afternoon US trade.
World oil prices rose on Tuesday in response to a weaker greenback and on speculation that prices were finding a base of support. The Brent crude price rose by $US1.44 or 3.0 per cent to $US49.60 a barrel while the US Nymex crude price rose by $US1.08 or 2.4 per cent to $US46.23 a barrel.
Base metal prices fell by up to 3.1 per cent on Tuesday with copper leading the declines. But nickel rose by 0.3 per cent. Gold rose on jitters about Greece with Comex gold futures price up by $US12.30 an ounce or 1.0 per cent to $US1,291.70 per ounce. Iron ore fell by US50c or 0.8 per cent on Tuesday to $US62.80 a tonne.
Ahead: In Australia, the Consumer Price Index is released with the weekly consumer confidence index. In the US, the Federal Reserve hands down its monetary policy decision. Weekly mortgage finance data is released.
Craig James is chief economist with CommSec.