In US economic data, the consumer price index (CPI) rose by 0.1% in August (survey: -0.1%) and was up 8.3% over the year (survey: +8.1%). The core CPI (ex-food and energy) lifted 0.6% in August (survey: +0.3%) to be up 6.3% over the year (survey: +6.1%). The NFIB small business optimism index rose from 89.9 in July to 91.8 in August (survey: 90.8).
European sharemarkets fell on Tuesday after a key US inflation report surprised to the upside in August. The pan-European STOXX 600 index shed 1.6% with interest rate sensitive real estate shares 3.9% lower. The German Dax index also lost 1.6% and the UK FTSE index slid 1.2%. In London trade, shares in Rio Tinto fell by 0.7% and shares in BHP dipped 1.1%.
US sharemarkets tumbled on Tuesday after hotter-than-expected inflation data fuelled investor bets on a large interest rate hike by the US Federal Reserve next week. Yield sensitive and high growth technology shares sold-off sharply with Apple (-5.9%), Meta Platforms (-9.4%), Microsoft (-5.5%) and Amazon.com (-7.1%) all trading lower. Boeing was the biggest drag (-7.2%) on the Dow Jones index. At the close of trade, the Dow Jones index fell by 1,276 points or 3.9%. The S&P 500 index shed 4.3% and the Nasdaq index lost 633 points or 5.2%. All three indexes notched their biggest one-day percentage drops since June 2020.
US treasuries were weaker on Tuesday (yields higher) as strongerthan-anticipated US inflation data cemented bets for another large interest rate hike by the US Federal Reserve. The US Treasury sold US$18bn of 30-year bonds at a yield of 3.511% into strong demand. US 10-year yields rose by around 5 points to near 3.41%. And US 2-year yields surged by around 17 points to 14-year highs near 3.74%.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0184 to lows near US$0.9968 and was near US$0.9970 at the US close. The Aussie dollar dipped from highs near US69.15 cents to lows near US67.25 cents and was near US67.30 cents at the US close. And the Japanese yen fell from near 141.83 yen per US dollar to JPY144.64 and was near JPY144.50 at the US close.
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Global oil prices fell about 1% on Tuesday in choppy trading as US consumer prices unexpectedly rose in August. But oil pared losses after Bloomberg reported the Biden Administration is considering refilling its emergency reserves when prices fall below US$80 a barrel. The Brent crude oil price fell by US83 cents or 0.9% to US$93.17 a barrel. And the US Nymex crude oil price dipped by US47 cents or 0.5% to US$87.31 a barrel.
Base metals were mixed on Tuesday. Copper fell by 1.1% after US inflation unexpectedly rose and pushed up the US dollar dampening demand. But aluminium and zinc both lifted 1.3%.
The gold futures price fell by US$23.20 an ounce or 1.3% to US$1,717.40 an ounce. Spot gold was trading near US$1,702 an ounce at the US close. Iron ore futures rose by US52 cents or 0.5% to US$102.13 a tonne after property developer China Evergrande
Group said it will restart construction at 668 of its 706 stalled projects. Ahead: In Australia, the labour account is issued. In the US, producer prices are released with MBA mortgage applications.
Originally published by CommSec