The Swiss National Bank has removed its three-year old cap against the euro, sending the Swiss franc soaring against major currencies.
In US economic data, producer prices fell by 0.3 per cent in December, but excluding food and energy (core measure), prices rose by 0.3 per cent. Economists had tipped a 0.1 per cent rise in the core measure. The Philadelphia Federal Reserve index eased from 24.3 to 6.3 in January, well short of expectations near 19.9. And new claims for unemployment insurance rose from 297,000 to 316,000 in the latest week, well above forecasts centred on a result near 291,000.
European shares responded to the surprise Swiss currency decision. The Swiss sharemarket plunged 8.7 per cent -- the biggest fall in 25 years. But the FTSEurofirst 300 index rose by 2.9 per cent with the German Dax up by 2.2 per cent and the UK FTSE lifted by 1.7 per cent. In London trade shares in BHP Billiton rose by 4.9 per cent while Rio Tinto gained 1.4 per cent.
US sharemarkets remained volatile on Thursday. Investors digested the Swiss currency change, movements in oil prices, earnings announcements and economic data. At the close of trade the Dow Jones was lower by 106 points (219 point trading range). The S&P 500 index was down by 0.9 per cent and the Nasdaq lost 68.5 points or 1.5 per cent. After the bell shares in Intel fell by 2.4 per cent after its earnings result.
US treasuries were firmer on Thursday (yields lower) in response to lower US equity markets and increased demand for safe-haven assets after the Swiss currency decision. US two-year yields fell by 7 points to 0.444 per cent while US 10-year yields fell by 9 points to 1.77 per cent.
Major currencies were mixed against the greenback in European and US trade on Thursday. The Euro fell from highs near $US1.1785 to lows near $US1.1575 and was around $US1.1610 in afternoon US trade. The Aussie dollar rose from lows near US81.50c to highs around US82.90c and was near US82.15c in afternoon US trade. And the Japanese yen lifted from 117.93 yen per US dollar to ¥116.26 and was near ¥116.51 in afternoon US trade.
World oil prices fell on Thursday with weaker US economic data raising worries about demand for crude oil. Brent crude fell by $US1.02 or 2.1 per cent to $US47.67 a barrel while the US Nymex crude price fell by $US2.23 or 4.6 per cent to $US46.25 a barrel.
Base metal prices were higher by up to 1.5 per cent on the London Metal Exchange on Thursday with zinc leading the gains although tin actually fell by 0.1 per cent. Gold rose, with the Comex gold futures price up by $US30.30 an ounce or 2.5 per cent to $US1,264.80 per ounce. Iron ore rose by US20c to $US68.00 a tonne on Thursday.
Ahead: In Australia, no major economic data is released. In the US, data on consumer prices and industrial production are released with consumer sentiment and capital flows data.
Craig James is chief economist with CommSec.