In US economic data, MBA mortgage applications rose 1.2% in the past week.

European sharemarkets closed higher on Wednesday as investors positioned for another potential slowdown in US
consumer prices. Real estate stocks saw the largest uptick, up 3.1%, with property developer Aroundtown’s shares jumping 8.6%. The continent-wide FTSEurofirst 300 index gained 0.4%. And the commodity-heavy UK FTSE 100 index was also up 0.4%, hitting its highest level since August 2018. Shares of JD Sports rose 7% after it upgraded its full-year profit guidance as investors cheered an “impressive” festive season sales performance.

US sharemarkets were higher on Wednesday ahead of the key US Consumer Price Index (CPI) release that’s expected to show a further deceleration, bolstering the case for a potential downshift in the pace of US Federal Reserve interest rate hikes. Shares of Google-parent Alphabet, Amazon.com and Tesla were up between 3.5% and 5.8%, among the top boosts to the S&P 500 index and the tech-heavy Nasdaq index. Shares of travel company Expedia gained 4.9% after broker Oppenheimer upgraded the stock to “outperform” from “perform”. At the close of trade, the
Dow Jones index rose 269 points or 0.8%. The S&P 500 index gained 1.3%. And the Nasdaq index added 189 points or 1.8%.

US government bonds rose on Wednesday (yields lower), a day before the release of key US consumer price data. Federal Reserve Bank of Boston President Susan Collins said she’s leaning towards a quarter-point (25 basis points) interest rate hike at the US central bank’s next meeting ending February 1. The US Treasury sold US$32 billion of 10-year notes at a yield of 3.575% into solid demand. US 10-year Treasury yields fell by around 8 points to near 3.54%. And US 2-year Treasury yields dropped by around 4 points to near 4.22%.

Major currencies were mostly weaker against the US dollar in European and US trade. The Euro rose from lows near
US$1.0724 to highs near US$1.0774 and was near US$1.0755 at the US close. But the Aussie dollar eased from highs near US69.24 cents to lows near US68.72 cents and was near US69.10 cents at the US close. And the Japanese yen dipped from near 132.14 yen per US dollar to around JPY132.84 and was near JPY132.45 at the US close.

 

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Global oil prices climbed 3% on Wednesday. Oil shrugged off a large US crude stockpile build with traders focusing on China as it speeds up purchases of US crude before the Lunar New Year. US crude inventories rose by 18.96 million barrels last week to 439.6 million barrels, the largest weekly build since February 2021. Analysts had expected a 2.24 million barrel drop. The Brent crude oil price rose US$2.57 or 3.2% to US$82.67 a barrel. And the US Nymex crude oil price added US$2.29 or 3% to US$77.41 a barrel.

Base metal prices advanced on Wednesday, fuelled by optimism that China’s economic reopening will spur demand in the world’s top consumer. Copper rose 2.6% to its highest level since June 2022. And aluminium gained 1.6%.

The gold futures price rose US$2.40 or 0.1% to US$1,878.90 an ounce. Spot gold was trading near US$1,876 an ounce at the US close. Iron ore futures lifted US$1.36 a tonne or 1.1% to a 6-month high of US$121.02 a tonne as
China’s economic outlook improved.

Ahead: In Australia, international trade figures are released. In China, inflation data is scheduled. In the US, the Consumer Price Index (CPI) is issued with initial jobless claims data and the monthly budget statement.

Originally published by CommSec