In US economic data, the producer price index (PPI) rose by 0.8% in May to be up by 10.8% on the year (survey: +10.9%). The core PPI (ex-food and energy) rose by 0.5% in May to be 8.3% higher on a year ago (survey: +8.6%). The NFIB small business optimism index eased from 93.2 to 93.1 in May (survey: 93). The IBD/TIPP economic optimism index fell from 41.2 to 38.1 in June (survey: 41.2). Johnson Redbook chain store sales rose by 11.4% in the past week compared with a year ago (prior: +12.4%).
European sharemarkets reversed early gains to finish lower on Tuesday. Healthcare lost 1.8% and industrials lost 1.7% but banks rose by 1.1% and oil & gas rose by 0.8%. The pan-European STOXX 600 index fell for the sixth straight day, down by 1.3% to 3- month lows. The German Dax index fell by 0.9% and the UK FTSE index lost 0.3%. In London trade, shares of Rio Tinto fell by 0.4% and shares in BHP fell by 0.2%.
US sharemarkets were mixed on Tuesday on nervousness ahead of Wednesday’s Federal Reserve interest rate decision. Traders are currently pricing in a 93.2% chance of a 75 basis point hike, up from 3.9% a week ago. In corporate news, shares in FedEx rose 14.4% after it lifted its quarterly dividend by 50%. The Dow Jones index fell by 152 points or 0.5%. The S&P 500 index lost 0.4%. But the Nasdaq index rose by 19 points or 0.2%.
US treasuries fell on Tuesday (yields higher) ahead of the Fed decision. US 10-year yields rose by 11 points to near 3.48%. And US 2-year yields rose by 16 points to near 3.44%.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0480 to lows near US$1.0400 and was near US$1.0415 at the US close. The Aussie dollar fell from highs near US69.70 cents to lows near US68.50 cents and was near US68.70 cents at the US close. The Japanese yen weakened from near 134.00 yen per US dollar to JPY135.45 and was near JPY135.30 at the US close.
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Global oil prices reversed earlier gains to finish lower by as much as 1.7% on Tuesday. Concerns that global economic growth will slow sharply in response to interest rate hikes weighs on sentiment. But supporting oil prices are tight global oil supplies, especially given the global bans on Russian oil imports. The Brent crude price fell by US$1.10 or 0.9% to US$121.17 a barrel. And the US Nymex crude price fell by US$2.00 or 1.7% to US$118.93 a barrel.
Base metal prices fell by between 0.7-5.5% on Tuesday with tin down the most. But zinc bucked the trend, rising by 0.1%.
The gold futures price fell by US$18.30 or 1.0% to US$1,813.50 an ounce. Spot gold was trading near US$1,806 an ounce at the US close. The iron ore futures price fell by US$1.27 or 0.9% to US$138.26 a tonne.
Ahead: In Australia, consumer confidence surveys are issued with overseas travel data. Chinese retail spending, production and investment figures are all scheduled. In the US, the Federal Reserve (FOMC) hands down its interest rate decision. Data on import/export prices, mortgage applications, retail sales, business inventories, and housing and factory activity are all scheduled.
Originally published by CommSec
