In US economic data, the consumer price index (CPI) rose by

1.3% – the biggest lift in 17 years – in June (survey: +1.1%) to be up 9.1% over the year (survey: +8.8%) – the highest annual rate since November 1981. The core CPI rose by 0.7% (survey: +0.5%) to be up 5.9% over the year (survey: +5.7%).

The US Federal Reserve Beige Book said the US economy grew at a “modest” pace since mid-May, with all districts experiencing “substantial” price increases.

European sharemarkets closed lower on Wednesday. The panEuropean STOXX 600 index fell by 1.0% with auto shares 2.3% lower. The German Dax index fell by 1.2% and the UK FTSE index shed 0.7%. In London trade, shares of Rio Tinto added 0.3% but BHP shares dipped 0.9%.

US sharemarkets tumbled on Wednesday as investors digested surprisingly strong US inflation data, fuelling fears of a larger-thanexpected interest rate hike by the US Federal Reserve later this month. Shares of Delta Air Lines slid 4.5% after its second-quarter earnings missed expectations. But Tesla shares climbed 1.7% with Twitter shares up 7.9% as the social media company sued Elon Musk. At the close of trade, the Dow Jones index fell by 208.5 points or 0.7% and the S&P 500 index dipped by 0.5%. The technologyheavy Nasdaq index shed 17 points or 0.2%.

US treasuries were mixed on Wednesday after the US inflation report. The inversion on the US 2-year/10-year yield curve accelerated to as much as 24.2 basis points, the most in nearly 22 years. The US Treasury sold US$19 billion of 30-year notes at a yield of 3.115% into solid demand. US 10-year yields fell by around 3 points to near 2.92% but US 2-year yields rose by around 10 points to near 3.15%.

Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.0000 to highs near US$1.0120 and was near US$1.0055 at the US close. The Aussie dollar fell from highs near US68.00 cents to lows near US67.27 cents and was near US67.55 cents at the US close. And the Japanese yen eased from near 136.95 yen per US dollar to JPY137.84 and was near JPY137.35 at the US close.

Global oil prices edged higher on Wednesday after US inventories rose. US commercial crude stocks rose by 3.3 million barrels, government data showed, versus market expectations for a modest draw in stocks. The Brent crude price rose by US8 cents or 0.1% to US$99.57 a barrel. And the US Nymex crude price added US46 cents or 0.5% to US$96.30 a barrel.

Base metal prices were lower on Wednesday. Copper fell by 0.3% to its lowest level since November 2020 as the prospect of higher US interest rates pushed the US dollar to its highest level in 20 years. Zinc fell most, down 2.7%, with nickel 1.1% lower.

The gold futures price rose by US$10.70 or 0.6% to US$1,735.50 an ounce. Spot gold was trading near US$1,735 an ounce at the US close. The iron ore futures price added US$2.07 or 1.9% to US$110.26 a tonne. Ahead: Aussie jobs and US producer prices data are both issued.

Originally published by CommSec