Scoreboard: Hong Kong jitters

Markets on both sides of the Atlantic fell as unrest in Hong Kong weighed on investor sentiment, while the iron ore price slipped further.

In US economic data, personal income rose by 0.3 per cent in August while spending rose 0.5 per cent, just ahead of forecasts. The pending home sales index fell by 1 per cent in August, ahead of the expected 0.1 per cent decline. And the Dallas Federal Reserve manufacturing index rose from 7.1 points to 10.8 points in September.

European shares eased on Monday, with investors monitoring pro-democracy rallies being held in Hong Kong. Shares in banks and luxury consumer stocks exposed to Hong Kong fell most. The FTSEurofirst 300 index fell by 0.4 per cent, the German Dax fell by 0.7 per cent while the UK FTSE lost less than 0.1 per cent. And Australia's major miners were weaker in London trade with shares in BHP Billiton down by 0.7 per cent while Rio Tinto fell by 1.3 per cent.

US sharemarkets eased but finished well off the day's lows as investors mulled economic data and pro-democracy rallies in Hong Kong. The Dow Jones index fell by 42 points or 0.3 per cent after being down 179 points in early trade. The broader S&P 500 index fell by 0.3 per cent while the Nasdaq lost 6.3 points or 0.1 per cent.

US treasury prices rose on Monday (yields lower) as global investors continued to reduce holdings of equities in favour of asset classes like government bonds. Civil unrest in Hong Kong was one factor driving the asset shift. US 2-year yields fell by 2 points to 0.575 per cent while US 10-year yields fell by 5 points to 2.484 per cent.

Major currencies were firmer against the greenback over the European and US sessions on Monday. The euro rose from lows near $US1.2670 to highs near $US1.2715, ending US trade near the $US1.2690. The Australian dollar rose from lows near US86.90c to highs around US87.45c before ending the US session near US87.20c. And the Japanese yen lifted from ¥109.13 per US dollar to ¥109.45, ending US trade near ¥109.45.

World oil prices lifted on Monday in response to strong US economic data. Investors are also wary ahead of the US refinery maintenance season where supply may be disrupted. Brent crude rose by US20c to $US97.20 a barrel while the US Nymex crude price rose by $US1.03 a barrel or 1.1 per cent to $US94.57 a barrel.

Base metal prices were generally firmer on Monday, up by as much as 1.3 per cent. But nickel fell by 1.8 per cent while tin lost 0.6 per cent. Gold prices rose modestly on Monday in response to a weaker US dollar and pro-democracy rallies in Hong Kong with the Comex gold futures quote up by $US3.40 an ounce or 0.3 per cent to $US1,218.80 per ounce. Iron ore fell by US90c a tonne to $US77.70 a tonne on Monday.

Ahead: In Australia, private sector credit, weekly consumer confidence and government financial estimates are released. In China, the final reading of the HSBC manufacturing purchasing managers’ index is expected. In the US the Case Shiller home price series is released with consumer confidence and the Chicago purchasing managers' index.

Craig James is chief economist at Commsec.

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