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In US economic data, the NFIB small business optimism index fell from 93.1 to a 9-year low of 89.5 in June (survey: 92.5).

European sharemarkets climbed on Tuesday. The pan-European STOXX 600 index rose by 0.5%, with financial services shares up 2.0%. The German Dax index gained 0.6%, despite Germany’s ZEW economic sentiment index dropping from -28 to -53.8 in July (survey: -40.5). The UK FTSE index lifted 0.2%. In London trade, shares of Rio Tinto shed 0.7% and BHP shares dipped 1.2%.

US sharemarkets fell on Tuesday as growing signs of a looming recession kept investors cautious ahead of Wednesday’s US inflation data. PepsiCo shares dipped 0.6%, despite beating its quarterly earnings estimates. Shares of apparel retailer Gap fell 5.0% after its CEO stepped down. But shares of Boeing jumped 7.4% after the plane maker’s June aircraft deliveries were the highest since March 2019. At the close of trade, the Dow Jones index fell by 192.5 points or 0.6% and the S&P 500 index dipped by 0.9%. The Nasdaq index shed 108 points or 1.0%.

US treasuries rose on Tuesday (yields lower). The benchmark US 2/10-year yield curve posted the largest inversion since at least 2007 during the trading session, signalling a potential US recession. The US Treasury sold US$33 billion of 10-year notes at a yield of 2.96% into weak demand. US 10-year yields fell by around 1 point to near 2.98% and US 2-year yields dipped by around 2 points to near 3.05%.

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from 20-year lows near US$1.000 to highs near US$1.0070 and was near US$1.0030 at the US close. The Aussie dollar lifted from lows near US67.10 cents to highs near US67.77 cents and was near US67.55 cents at the US close. And the Japanese yen rose from near 137.51 yen per US dollar to JPY136.49 and was near JPY136.85 at the US close.

Global oil prices tumbled more than 7% on Tuesday to below US$100 a barrel due to a strong US dollar, demand-sapping Covid-19 curbs in top crude importer China, and rising fears of a global economic slowdown. Dwindling liquidity also exacerbated price moves. The Brent crude price dropped by US$7.61 or 7.1% to US$99.49 a barrel. And the US Nymex crude price fell by US$8.25 or 7.9% to US$95.84 a barrel.

Base metal prices were mostly lower on Tuesday. Aluminium prices tumbled 0.7% to 14-month lows on expected increases to supply from top producer China. Copper was down 3.1% with tin 2.6% lower, but lead was up 0.4%.

The gold futures price fell by US$6.90 or 0.4% to US$1,724.80 an ounce. Spot gold was trading near US$1,725 an ounce at the US close. The iron ore futures price shed US$3.46 or 3.1% to US$108.19 a tonne. The demand outlook dimmed on fears China may have to re-impose strict Covid-19 restrictions that could weigh on construction activity.

Ahead: In Australia, building activity data is issued. Chinese trade data is scheduled. In the US, consumer prices data is released with the Federal Reserve’s Beige Book. The Reserve Bank of New Zealand and Bank of Canada hand down policy decisions.

Published by CommSec