In US economic data the ISM manufacturing index fell from 55.1 to 53.5 in January, below forecasts centred on a result near 54.5. Personal income rose by 0.3 per cent in December (ahead of forecasts tipping a 0.2 per cent gain) with consumption down by 0.3 per cent -- the largest drop in spending since September 2009. Construction spending rose by 0.4 per cent in December, short of forecasts tipping a 0.7 per cent gain.
European shares were mixed on Monday. Overall the FTSEurofirst index rose by 0.2 per cent while Spanish and Italian stocks fell and the Greek index rose by 4.6 per cent. The German Dax rose by 1.3 per cent and the UK FTSE rose by 0.5 per cent. Mining shares rose in London, with BHP Billiton up by 2.8 per cent while Rio Tinto lifted by 1.2 per cent.
US sharemarkets dipped in and out of positive territory on Monday as investors weighed the latest economic data, corporate results and shifts in the European political landscape. Shares in Exxon Mobil rose by 1.1 per cent after better-than-expected earnings results. At the close of trade, the Dow Jones was up by 196 points or 1.1 per cent after trading in a 330 point range. The S&P 500 index was up by 1.3 per cent and the Nasdaq was up by 41 points or 0.9 per cent.
US long-term treasury prices were weaker (yields higher) on Monday as investors took some profits on the sharp gains made over the past week. There was caution ahead of US jobs data on Friday. US two-year yields rose by 1 point to 0.465 per cent while US 10-year yields were up by 1 point to 1.66 per cent.
Major currencies were modestly firmer against the greenback in European and US trade on Monday. The Euro lifted from $US1.1290 to $US1.1360 and was near $US1.1350 in afternoon US trade. The Aussie dollar rose from lows near US77.30c to US78.30c and was near US78.00c in late US trade. And the Japanese yen strengthened from 117.82 yen per US dollar to ¥117.10 and was near ¥117.19 in afternoon US trade.
World oil prices rose again on Monday as investors debated whether prices were forming a base after sharp declines in recent months. Brent crude rose by $US1.76 or 3.3 per cent to $US54.75 a barrel while US Nymex crude rose by $US1.33 or 2.8 per cent to $US49.57 a barrel.
Base metal prices were mixed on Monday with gains and losses not exceeding 1.1 per cent. Nickel rose by 1.1 per cent but tin lost 0.9 per cent. Gold was unchanged with the Comex gold futures price at $US1,278.50 per ounce. Iron ore fell by US40c or 0.7 per cent on Monday to $US61.30 a tonne – the lowest level since May 2009.
Ahead: In Australia, the Reserve Bank Board meets. Trade data is released with building approvals and weekly consumer confidence figures. In the US, data on factory orders is released together with auto sales.
Craig James is chief economist with CommSec.