In US economic data, the ISM services index rose from 54.4 to 56.5 in November (survey: 53.3). The prices component fell from 70.7 to 70.0 but employment rose from 49.1 to 51.5. The S&P Global services index fell from 47.8 to 46.2 in November (survey: 46.1). Factory orders rose by 1.0% in October (survey: +0.7%).
European sharemarkets were mixed on Monday on recession fears. Eurozone business activity fell for a fifth month. While the composite purchasing managers index rose from 47.3 to 47.8, readings remain below 50, indicating contraction of activity. Technology fell 0.5% but miners rose 0.6%. Shares in Credit Suisse rose 2.9% on Wall Street Journal reports of investor interest in the Swiss bank. The continent-wide FTSEurofirst 300 index fell by 0.5% but the UK FTSE 100 rose by 0.2%.
US sharemarkets fell on Monday. Firmer-than-expected purchasing manager survey results added to concerns that the Federal Reserve will continue to lift interest rates aggressively. Financials fell 2.5% and energy lost 2.9%. Shares in Telsla fell 6.4% on reports of a production cut in China. According to CME Fedwatch, investors see an 89% chance that the US central bank will increase interest rates by 50 basis points next week to 4.25%-4.50%, with the rates peaking at 4.984% in May 2023. At the US close, the Dow Jones index was down by 483 points or 1.4%. The S&P 500 index fell by 1.8%. And the Nasdaq index lost 222 points or 1.9%.
US government bonds were weaker on Monday (yields higher). US 10-year Treasury yields rose by 9 points to near 3.60%. And US 2-year Treasury yields rose by 13 points to near 4.41%. Major currencies fell against the US dollar in European and US trade. The Euro fell from highs near US$1.0590 to lows near US$1.0480 and was near lows at the US close. The Aussie dollar fell from highs near US68.45 cents to lows near US66.90 cents and was near lows at the US close. And the Japanese yen eased from near 134.27 yen per US dollar to near JPY136.80 and was near weakest levels at the US close.
Global oil prices fell by around 3.5% on Monday in response to a weaker US sharemarket and fears of global recession. OPEC+ agreed to continue with the plan to cut output by 2 million barrels per day from November through 2023. News of an easing of Covid restrictions in China also provided some support to prices. The Group of Seven (G7) countries and Australia also agreed on a US$60 a barrel price cap on seaborne Russian oil. The Brent
crude oil price fell by US$2.89 or 3.4% to US$82.68 a barrel. And the US Nymex crude oil price fell by US$3.05 or 3.8% to US$76.93 a barrel.
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Base metal prices eased on Monday with copper down 1.9% and aluminium down 1%.
The gold futures price fell by US$28.30 an ounce or 1.6% to US$1,781.30 an ounce. Spot gold was trading near US$1,767 an ounce at the US close. Iron ore futures rose by US24 cents a tonne or 0.2% to US$107.68 a tonne.
Originally published by CommSec
