In US economic data, the consumer price index (CPI) rose by 0.1% in November (survey: +0.3%). Annual growth eased from 7.7% to 7.1% in November (survey: +7.3%), its lowest level since December 2021. The core CPI (ex-food and energy) lifted 0.2% in November (survey: +0.3%). Annual growth of the core CPI fell from 6.3% to 6% in November (survey: +6.1%). The NFIB small business optimism index rose from 91.3 to 91.9 in November (survey: 90.5).
European sharemarkets rallied on Tuesday as US inflation figures came in lower than forecast. Interest rate sensitive
technology shares led gains, up 3.4%. The ZEW index capturing expectations for the German economy over the next six months rose from -36.7 to -23.3 in December (survey: -26.4). The continent-wide FTSEurofirst 300 index gained 1.2%. And the UK FTSE 100 index added 0.8%, with the British pound hitting a sixmonth high against the US dollar.
US sharemarkets climbed on Tuesday, led by rate sensitive megacap stocks, after a smaller-than-expected rise in US
consumer prices raised hopes that the US Federal Reserve could soften its aggressive stance on interest rate hikes. Shares of Meta Platforms (+4.7%) and Google-parent Alphabet (+2.5%) both rose. Higher oil prices pushed up shares of Chevron (+2.2%) and Halliburton (+7.9%). Moderna shares surged 19.6% on upbeat trial data for a skin cancer vaccine. At the close of trade, the Dow Jones index rose by 104 points or 0.3% after jumping 707 points
earlier in the session. The S&P 500 index lifted 0.7% and the Nasdaq index added 113 points or 1%.
US government bonds were stronger on Tuesday (yields lower) after the release of data showing US consumer prices barely rose last month. The US Treasury sold US$18 billion of 30-year notes at a yield of 3.513% into weak demand. US 10-year Treasury yields fell by around 10 points to near 3.52%. And US 2-year Treasury yields dipped by around 17 points to near 4.23%.
Major currencies were stronger against the US dollar in European and US trade. The Euro rose from lows near US$1.0527 to highs near US$1.0668 and was near US$1.0630 at the US close. The Aussie dollar lifted from lows near US67.51 cents to highs near US68.92 cents and was near US68.55 cents at the US close. And the Japanese yen firmed from near 137.83 yen per US dollar to JPY134.68 and was near JPY135.60 at the US close.
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Global oil prices jumped by around 3% on Tuesday as investors bought risk assets and the US dollar softened after US data pointed to slowing inflation. The market was also buoyed by concern about supply disruptions, including the ongoing shutdown of the Canada-to-US Keystone crude pipeline following a massive leak. The Brent crude oil price rose by US$2.69 or 3.4% to US$80.68 a barrel. And the US Nymex crude oil price gained US$2.22 or 3% to US$75.39 a barrel.
Base metal prices advanced on Tuesday. Copper prices rose by 1.2% to near six-month highs due to a weaker US dollar after a further decline in US inflation raised the likelihood of an easing in the pace of US rate hikes. Aluminium rose by 2%.
The gold futures price rose by US$33.20 an ounce or 1.9% to US$1,825.50 an ounce. Spot gold was trading near
US$1,811 an ounce at the US close. Iron ore futures slid US24 cents a tonne or 0.2% to US$109.23 a tonne.
Ahead: In Australia, Reserve Bank Governor Philip Lowe delivers a speech at the AusPayNet Annual Summit.
In the US, the Federal Reserve hands down its interest rate decision. Import and export prices are also released.
Originally published by CommSec