According to minutes of the US Federal Reserve July 26-27 policy-making meeting, “Participants agreed that there was little evidence to date that inflation pressures were subsiding.” But “many”
participants also noted a risk that the Fed “could tighten the stance of policy by more than necessary to restore price stability.”
In US economic data, retail sales were flat in July (survey: +0.1%). Business inventories lifted 1.4% in June as expected. Mortgage applications fell by 2.3% in the past week after rising 0.2% in the previous week.
European sharemarkets closed lower on Wednesday while bond yields rose after data showed that UK inflation hit 10.1% in July, the highest in 40 years. Investors fear that global interest rates will need to keep rising to control inflation. The pan-European STOXX 600 index fell by 0.9%. The German Dax index lost 2.0% on news that 20 ships are stuck in traffic on the Rhine after a vessel’s engine failure closed part of the waterway. The Rhine is Germany’s main commercial artery. The UK FTSE index fell by 0.3%. In London trade, shares of Rio Tinto and BHP shares both fell by 0.6%.
US sharemarkets were lower on Wednesday as investors digested the minutes of the last Federal Reserve meeting. Shares in Target fell 2.7%, in response to weak sales results. The Dow Jones index closed lower by 172 points or 0.5%. The S&P 500 index fell by 0.7%. And the Nasdaq index fell by 164 points or 1.3%.
US treasuries fell on Wednesday (yields higher). The US Treasury sold US$15 billion worth of 20-year bonds at a yield of 3.38%. US 10-year yields rose by around 8 points to near 2.90%. And US 2-year yields lifted by around 3 points to near 3.28%.
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Major currencies were mixed against the US dollar in European and US trade. The Euro rose from lows near US$1.0145 to highs near US$1.0202 and was near US$1.0175 at the US close. But the Aussie dollar fell from highs near US70.25 cents to lows near US69.10 cents and was near US69.35 cents at the US close. And the Japanese yen eased from 134.11 yen per US dollar to JPY135.49 and was near JPY135.07 at the US close.
Global oil prices rose by around 1.5% on Wednesday. Reuters notes “a steeper-than-expected drawdown in US crude stocks outweighed concerns over rising Russian output and exports as well as recession fears.” The Brent crude price rose by US$1.31 or 1.4% to US$93.65 a barrel. And the US Nymex crude price rose by US$1.58 or 1.8% to US$88.11 a barrel.
Base metal prices were mixed on Wednesday. Aluminium and tin rose by as much as 0.9% and other metals fell with zinc down 4.7%.
The gold futures price fell by US$13.00 an ounce or 0.7% to US$1,776.70 an ounce. Spot gold was trading near US$1,764 an ounce at the US close. Iron ore futures fell by US$2.04 or 1.9% to
US$104.59 a tonne.
Ahead: In Australia, the labour force survey and average weekly earnings data are released. In the US, jobless claims for unemployment benefits, existing home sales data, the Philadelphia
Federal Reserve manufacturing index and the Conference Board leading index are all scheduled
Originally published by CommSec