Scoreboard: Retail optimism

Encouraging retail sales figures and China trade data led European markets higher, while Wall Street rose in early trade before reversing course in the afternoon.

In US economic data, a survey of small businesses -- the NFIB business optimism index -- rose from 98.1 to 100.4 in December. The JOLTS job openings index rose from 4.83 million to 4.972m in November. And chain store sales were up by 3.8 per cent in the latest week on a year ago, down from the 4.3 per cent gain in the previous week.

European shares rose on Tuesday. Investors were encouraged by Chinese trade data and good sales data from retailers. The STOXX Europe retail index rose by 2.9 per cent. Overall the FTSEurofirst 300 index rose by 1.4 per cent with the German Dax up by 1.6 per cent and the UK FTSE was up 0.6 per cent. Also there were gains of 3.3 per cent in Greece and 2.0 per cent in Italy. In London trade shares in BHP Billiton rose by 0.4 per cent while Rio Tinto fell by 0.2 per cent.

US sharemarkets reversed course in volatile trade on Tuesday. Around 1pm the S&P 500 fell below its 50-day moving average, dragging key indexes lower. The Dow Jones lost 130 points in 25 minutes. After being up 282 points at the open of trade, the Dow Jones ended trade lower by 27 points or 0.2 per cent (425 point trading range). The S&P 500 index fell by 0.3 per cent and the Nasdaq was down by 3 points or 0.1 per cent.

US treasuries were firmer on Tuesday (yields lower). There was average demand for a $21 billion auction of 10-year notes. Economic data was generally positive but equities lost favour over the session compared with treasuries. US two-year yields fell by 2 points to 0.533 per cent while US 10-year yields fell by 2 points to 1.893 per cent.

The euro and commodity currencies fell against the greenback in European and US trade on Tuesday. The Euro fell from highs near $US1.1850 to lows near $US1.1755 and was around $US1.1765 in afternoon US trade. The Aussie dollar fell from highs near US81.80c to lows around US81.30c and was near US81.55c in afternoon US trade. But the Japanese yen lifted from 118.80 yen per US dollar to ¥117.53 and was near ¥117.80 in afternoon US trade.

World oil prices fell to fresh 6-year lows on Tuesday. The United Arab Emirates has defended OPEC's decision not to cut output. Brent crude fell by US84c or 1.8 per cent to $US46.59 a barrel while the US Nymex crude price fell by US18c or 0.4 per cent to $US45.89 a barrel. The differential between Brent and Nymex traded at zero earlier in the session.

Base metal prices were lower by up to 3.0 per cent on the London Metal Exchange on Tuesday with nickel leading the declines although aluminium did best, down just 0.7 per cent. Gold rose, with the Comex gold futures price up by $US1.60 an ounce or 0.1 per cent to $US1,234.40 per ounce. Iron ore fell by US60c to $US67.90 a tonne on Tuesday.

Ahead: In Australia, lending and job vacancies data are released. In the US, retail sales, import and export prices and weekly mortgage finance data are released.

Craig James is chief economist with CommSec.

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