Scoreboard: Slowing services

Weaker than expected US services data and a slowdown in forward orders sent the US dollar lower and gave the Aussie a boost.

In US economic news, the ISM non-manufacturing index slipped from 53.9 to 53.0 in December - the slowest expansion in six months. The business activity index was relatively robust at 55.2. The biggest decline occurred in the forward orders index which fell 7 points to 49.4 - the first signs of a contraction since July 2009. US factory orders lifted by 1.8 per cent in November, in line with estimates. Excluding transportation factory orders rose by 0.6 per cent.  

European shares were mixed on Monday, as weaker global services data was partly offset by news that Spain's services sector grew at its fastest pace in over six years. Spain's IBEX rose by 0.9 per cent supported by the Spanish banking sector. The FTSEurofirst 300 index fell by 0.2 per cent with the UK FTSE flat and the German Dax down 0.1 per cent. Mining shares were weaker with BHP Billiton shares down by 1.6 per cent in London trade while Rio Tinto fell by 3.1 per cent.

US share markets ended a volatile session mostly flat on Monday. The tech sector recorded the biggest losses after broker downgrades for Twitter (down 5.4 per cent) and EBay (down 3 per cent). Ford shares rose 0.7 per cent after it said it had boosted sales in China by nearly 50 per cent last year, edging past Toyota and Honda. With less than an hour of trade left, the Dow Jones was down by 2 points while the S&P 500 was down 0.1 per cent and the Nasdaq fell by 10 points or 0.2 per cent.

US treasury prices rose on Monday (yields lower) after the weaker-than-expected US services sector raised hopes that the Federal Reserve would slow its reduction of bond purchases. US 2 year fell by 2 points to 0.39 per cent while US 10 year yields fell by 3 points to 2.97 per cent.

The US dollar fell against the major currencies on Monday following the weaker service sector data. The Euro rose from lows around US$1.3570 to highs near US$1.3650 and was trading around US$1.3630 in afternoon US trade. The Aussie dollar rose from lows near US89.35c to highs near US89.75c, and held near US89.65c in late US trade. And the Japanese yen rose from lows near 104.85 yen per US dollar to highs near JPY103.95 and was trading near 104.30 in afternoon US trade.

World oil prices were mixed on Monday in choppy trade. Reports of restarted production at a Libyan oilfield was offset by doubts about its ability to reach markets. Brent crude rose by US23c or 0.2 per cent to US$107.12 a barrel while US Nymex crude fell by US53c or 0.6 per cent to US$93.43 a barrel. 

Base metal prices were mostly stronger on the London Metal Exchange on Monday, with the exception of Nickel (down 2.1 per cent) and lead (down 0.5 per cent). Copper rose by 0.2 per cent supported by the falling US dollar.  The Comex gold futures suffered a sudden but brief drop on Monday. A trade of about 4,200 contracts sent the price tumbling by over US$30 an ounce before recovering to close down just US60c or 0.1 per cent at US$1,238.60 per ounce. The iron ore price fell by US20c to US$134.80 a tonne.

Looking forward, in Australia, the trade data is released. In the US, trade data is also released.