SCOREBOARD: QE rift
Wall Street turned down after the release of Fed minutes showing a divide over the resolution of QE3.
Meanwhile, in economic data, the ADP national employment index showed US private sector jobs grew by 215,000 in December, ahead of forecasts for a gain of 133,000. The New York ISM index rose from 561.1 to 563.2 in December. But claims for unemployment insurance rose by 10,000 to 372,000 in the latest week. And Challenger report that there were 32,556 job layoffs in December, down from 57,100 in November.
European shares were mixed on Thursday, with profit-taking being tempered by solid US economic data. The benchmark FTSEurofirst 300 index rose by 0.5 per cent to fresh 20-month highs. But while the UK FTSE rose by 0.3 per cent, the German Dax eased by 0.3 per cent. And share prices of mining stocks eased in line with base metal prices, with Rio Tinto down by 0.9 per cent in London trade while BHP Billiton lost 0.4 per cent.
US sharemarkets fell at the open of trade, rallied ahead of the release of Federal Reserve minutes, then eased again. With just over a hour of trade to go, the Dow Jones was down by 13 points, or 0.1 per cent, after trading in a tight 68 point range. The S&P 500 was down 0.2 per cent and the Nasdaq was down by 8 points or 0.3 per cent.
US long-term treasuries fell again on Thursday (yields higher) in response to strong economic data and suggestions of an end to the Federal Reserve policy of asset purchases. US 2-year yields were steady at 0.26 per cent and US 10-year yields rose by 5 points to 1.89 per cent.
The US dollar gained against major currencies after the release of Fed minutes. The euro had eased from highs near $US1.3170 to $US1.3110 over the European and US sessions before the minutes were released, but slid to $US1.3060 in afternoon US trade. The Aussie dollar had lifted from 104.75 cents to 105.25 cents but was back near 104.75 cents in late US trade. And the Japanese yen had lifted from ¥87.30 per US dollar to ¥86.78, but eased to ¥87.25 after the release of the Fed minutes.
World crude oil prices fell on Thursday. Brent fell by US38 cents, or 0.3 per cent, to $US112.14 and Nymex crude eased by US20 cents to $US92.92 a barrel.
Base metal prices eased between 0.6-2.4 per cent on the London Metals Exchange on Thursday as investors booked profits on the previous day of solid gains. The Comex gold futures price was lower by $14.20 or 0.8 per cent to $US1,674.60 per ounce. In after-hour trade, gold fell further to $US1664.00 an ounce. But the spot iron ore price rose by $US4.90, or 3.3 per cent, to $US149.80 a tonne.
Looking to the day ahead, in Australia, car sales data is released with the Performance of Services index. In the US, non-farm payrolls data is released with the ISM services index.
Craig James is CommSec's chief economist. Adam Carr is on leave, returning January 7.
See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.