Scoreboard: PMI pressure

In US economic data, the Markit Flash PMI was unchanged in September at 57.9 -- which was the highest since April 2010. Sub-indices were healthy, particularly the employment index, which lifted to 56.6 -- the highest since March 2012. US FHFA home prices rose by 0.1 per cent in July to be up 4.4 per cent over the year. The Richmond Fed index rose from 12 to 14 in September.

European shares fell for a second straight session on Tuesday after weaker-than-expected flash manufacturing data. French composite PMI eased from 49.5 to 49.1 in September, while German manufacturing grew at a slower than expected pace. The eurozone flash composite PMI fell from 52.5 to 52.3 - a nine-month low. The FTSEurofirst 300 index fell by 1.2 per cent, further retreating from recent six years highs. The German Dax fell by 1.6 per cent while the UK FTSE lost 1.4 per cent. And Australia's major miners bucked the trend higher in London trade, with shares in BHP Billiton up by 0.6 per cent while Rio Tinto gained 1.6 per cent.

US sharemarkets weakened on Tuesday, tracking European sharemarket losses following the weaker eurozone business activity data. Declines were broad-based with all 10 S&P 500 sectors lower. Consumer Staples led the declines down 0.9 per cent. The Dow Jones index fell by 117 points or 0.7 per cent. The broader S&P 500 index fell for the third straight session down by 0.6 per cent while the Nasdaq lost 19 points or 0.4 per cent.

US treasury prices rose again on Tuesday (yields lower) after US warplanes bombed Syria, triggering concerns about geopolitical risk and driving safe-haven demand. US 2 year yields were down 2 point to 0.536 per cent while US 10 year yields were down by 4 points to 2.531 per cent.

Major currencies were weaker against the greenback over the European and US sessions on Tuesday. The Euro fell from highs near $US1.2900 to around $US1.2840, ending US trade near $US1.2850. The Australian dollar fell from highs near US89.25c to lows around US88.30c before ending the US session near US88.45c. The Japanese yen weakened from 108.30 yen per US dollar to ¥108.95, ending US trade near ¥108.85.

World oil prices were mixed on Tuesday as ample world oil supplies offset Middle East tensions. Brent crude fell by US12c or 0.1 per cent to $US96.85 a barrel while the US Nymex price rose for the first time in five sessions up by US69c a barrel or 0.8 per cent to $US91.56 a barrel.

Base metal prices were mostly higher on Tuesday with the exception of Aluminium (down 0.5 per cent). Zinc led the gains lifting by 0.8 per cent, followed by Nickel up 0.6 per cent. Gold prices rose on Tuesday with the Comex gold futures quote higher by $US4.10 an ounce or 0.3 per cent to $US1,222 per ounce. Iron ore fell by US40c or 0.5 per cent on Tuesday to $US79.40 a tonne.

Ahead: In Australia, the Reserve Bank releases the Financial Stability Review. In the US new home sales data is released.

Craig James is chief economist at Commsec.