Scoreboard: Mario's mandate

A commitment to buy bonds by ECB president Mario Draghi inspired European markets, while big takeover plays in the US bolstered Wall Street.

In the US, industrial production fell by 0.1 per cent in October, short of forecasts tipping a 0.2 per cent gain. The New York Fed manufacturing index rose from 6.17 to 10.16 in November.

European shares rose on Monday on supportive comments from the European Central Bank president. Mario Draghi said that the ECB was unanimous in its commitment to use unconventional measures such as bond buying to prevent deflation taking hold: "Other unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds." The FTSEurofirst 300 index rose by 0.5 per cent, with the UK FTSE up by 0.3 per cent and the German Dax was up by 0.6 per cent. In London trade shares in BHP Billiton and Rio Tinto both gained 0.6 per cent.

US sharemarkets were mixed again on Monday. Merger and acquisition activity was in focus. In the pharma sector Allergan agreed to be bought by Actavis in a deal worth up to $US65.5 billion. While, in the oil services sector, Halliburton said it would buy Baker Hughes for around $US35 billion. With just over an hour of trade to go, the Dow Jones was up by 20 points or 0.1 per cent. The S&P 500 index was up by 0.1 per cent but the Nasdaq was down by 12 points or 0.3 per cent.

US treasuries were mixed on Monday. Investors digested latest economic data from the US and Japan. And many were cautious of setting positions ahead of the release of minutes from the last Federal Reserve meeting. US 2-year yields fell by 2 points to 0.508 per cent while US 10-year yields rose by 1 point to 2.338 per cent.

The US dollar rose against major currencies on Monday. The euro fell from highs near $US1.2555 to lows near $US1.2445, and was around $US1.2455 in late US trade. The Australian dollar fell from highs near US87.90c to around US86.95c, and was at US87.15c in late US trade. The Japanese yen eased from near 115.50 yen per US dollar to ¥116.53 and was at ¥116.47 in late US trade.

World oil prices fell on Monday in response to a stronger US dollar. A firmer greenback reduces the purchasing power of European and Asian buyers of dollar-denominated commodities. News that Japan had gone back into recession also reduced investor interest in oil. Brent crude fell by US10c or 0.1 per cent to $US79.31 a barrel while the US Nymex crude price fell by US18c or 0.2 per cent to $US75.64 a barrel.

Base metal prices rose by up to 1.4 per cent on the London Metal Exchange on Monday with nickel leading the gains. But zinc fell by 0.2 per cent and tin lost 0.1 per cent. Gold fell on Monday as the US dollar recovered. Comex gold futures fell by $US2.10 an ounce or 0.2 per cent to $US1,183.50 per ounce. Iron ore fell by US40c to $US75.10 a tonne on Monday.

Ahead: In Australia, weekly consumer sentiment data is released. In the US, producer prices, capital flows, the NAHB housing market index and weekly chain store sales data are issued.

Craig James is chief economist at Commsec.

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