Scoreboard: Wall Street witching

The expiration of stock options, index options, index futures and single-stock futures influenced a rally in US markets, while oil prices posted their biggest gains.

In US economic data, the Kansas City Federal Reserve manufacturing index was steady at 9 in December with the composite index up from 7 to 8.

European shares were mixed on Friday as investors positioned after the steep gains recorded by markets on Thursday. The FTSEurofirst 300 index was up by 0.4 per cent but the  eurozone blue-chip EuroSTOXX 50 lost 0.4 per cent and the German Dax lost 0.3 per cent. In London trade, the FTSE rose by 1.2 per cent with shares in BHP Billiton up by 3.6 per cent while Rio Tinto lifted 2.1 per cent. 

US sharemarkets rose on Friday although gains were trimmed decisively in the final hour of trade. Influencing trade was quadruple witching -- the expiration of stock options, index options, index futures and single-stock futures. After being up 96 points, the Dow Jones finished higher by almost 27 points or 0.2 per cent. The S&P 500 index rose by 0.5 per cent while the Nasdaq lifted by 17 points or 0.4 per cent.  For the week, the Dow rose by 3.0 per cent, the S&P rose by 3.4 per cent and the Nasdaq gained 2.4 per cent.

US long-term treasuries rose on Friday (yields lower) in response to end-week bargain-hunting. US 2 year yields rose by 1 point to 0.642 per cent while US 10 year yields fell by 5 points to 2.16 per cent. Over the week US 2 year yields rose by six points while US 10 year yields rose by four points.

Major currencies fell against the greenback in European and US trade on Friday with the US dollar index at the highest levels since April 2006. The euro eased from highs near US$1.2300 to around US$1.2220 and was at US$1.2225 in late US trade. The Aussie dollar fell from highs near US81.90c to around US81.20c and was around US81.40c in late US trade. And the Japanese yen weakened from 118.85 yen per US dollar to JPY119.62 and was near JPY119.49 in late US trade. The Aussie was at US81.6c this morning with Japanese yen at JPY119.38.

World oil prices posted their biggest daily gains in two years on Friday with analysts attributing the gains to traders taking profits on short positions. There is debate by analysts that producers have put a short-term floor price for oil at US$60 a barrel. Brent crude rose by US$2.11 or 3.6% to US$61.38 a barrel. US Nymex crude rose by $US2.41 or 4.5% to US$56.52 a barrel. Over the week Brent crude fell by US47c or 0.8 per cent while Nymex eased by US$1.29 or 2.1%.

Base metal prices rose by up to 2.7 per cent on the London Metal Exchange on Friday with zinc leading the gains  But nickel lost 0.3 per cent and aluminium lost 0.1 per cent. Over the week prices slumped as much as 6.5 per cent with nickel leading the declines although zinc lost only 0.3 per cent. Gold rose modestly on Friday with Comex gold futures up by US$1.20 an ounce or 0.1 per cent to $US1,196.00 per ounce. Over the week gold lost $US26.50 or 2.2 per cent. Iron ore rose by $US1.50 to $US69.50 a tonne on Friday and was up US80c over the week.

Ahead: In Australia no major economic data is scheduled. In the US, data on existing home sales is released with the National Activity index.