In a speech delivered to Sweden’s Riksbank on Tuesday, US Federal Reserve Chair Jerome Powell avoided commenting on US interest rate policy. But he said, “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.”
In US economic data, the NFIB small business optimism index fell from 91.9 to 89.8 in December (survey: 91.5), the second weakest level since 2013. Wholesale inventories lifted 1% in November (survey: +1%).
European sharemarkets dipped on Tuesday after hitting 8- month highs in the previous session. Retail stocks fell 1.4%. The continent-wide FTSEurofirst 300 index dipped 0.6%. But Bayer shares gained 4.1% after it said that its new blood clot drug could make more than -heavy UK FTSE 100 index dropped 0.4%.
US sharemarkets were higher on Tuesday. Investors bet the upcoming December Consumer Price Index (CPI) could show further deceleration, potentially giving the US central bank room to slow the pace of its interest rate hikes. In corporate news, Microsoft (+0.8%) is in talks to invest as much as US$10 billion in OpenAI, the creator of artificial intelligence bot ChatGPT. At the close of trade, the Dow Jones index rose 186 points or 0.6%. The S&P 500 index gained 0.7%. And the Nasdaq index lifted 107 points or 1%.
US government bonds fell on Tuesday (yields higher) as traders braced for highly anticipated consumer prices data later this week. US Federal Reserve Governor Michelle Bowman said the central bank has “a lot more work to do” to curb inflation. The US Treasury sold US$40 billion of 3-year notes at a yield of 3.977% into strong demand. US 10-year Treasury yields rose by around 9 points to near 3.61%. And US 2-year Treasury yields lifted by around 4 points to near 4.24%.
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Major currencies were mostly weaker against the US dollar in European and US trade. The Euro rose from lows near
US$1.0711 to highs near US$1.0754 and was near US$1.0735 at the US close. But the Aussie dollar eased from highs near US69.18 cents to lows near US68.59 cents and was near US68.90 cents at the US close. And the Japanese yen weakened from near 131.66 yen per US dollar to around JPY132.45 and was near JPY132.25 at the US close.
Global oil prices climbed on Tuesday as the US government forecast record global petroleum consumption next year and the US dollar hovered near seven-month lows. Global consumption of liquid fuels is forecast to reach 102.2 million barrels per day in 2024. The Brent crude oil price rose US45 cents or 0.6% to US$80.10 a barrel. And the US Nymex crude oil price added US49 cents or 0.7% to US$75.12 a barrel.
Base metal prices advanced on Tuesday as investors bet the reopening of the Chinese economy combined with fresh stimulus will fuel metals demand. Copper prices rose 1.1% to a 6½-month high. And aluminium added 0.9%.
The gold futures price fell US$1.30 or 0.1% to US$1,876.50 an ounce. Spot gold was trading near US$1,877 an ounce at the US close. Iron ore futures lifted US$2.25 a tonne or 1.9% outlook.
Ahead: In Australia, the monthly Consumer Price Index (CPI) indicator will be released with retail trade, job vacancies and engineering construction activity data. In the US, weekly MBA mortgage applications figures are scheduled.
Originally published by CommSec