In US economic data, MBA mortgage applications fell by 4.5% in the past week. Housing starts dropped 8.1% in September to a 1.439 million annualised rate (survey: 1.46m). Building permits rose by 1.4% in September to a 1.564 million annualised rate (survey: 1.53m).

The US Federal Reserve Beige Book, which surveys activity across the Fed’s twelve districts, indicated that the US economy grew “modestly” and inflation continued to be “elevated.”

European sharemarkets snapped a four-day rally on Wednesday as investors fretted about runaway inflation. The continent-wide FTSEurofirst 300 index lost 0.4%. Eurozone consumer inflation was revised lower to 9.9% from 10% over the year to September, but was still at a record high (survey: 10%). The UK FTSE 100 index dipped 0.2% after the UK consumer price index (CPI) jumped by 10.1% in annual terms in September, matching a 40-year high hit in July (survey: 10.0%).

US sharemarkets halted a two-day rally on Wednesday as a surge in US government bond yields on investor expectations of bigger interest rate hikes dampened sentiment. Shares of Abbott Laboratories fell 6.5% after reporting lower-than-expected growth in international medical device sales. Netflix shares jumped 13.1% after
reversing customer losses. United Airlines (+5%), Procter & Gamble (+0.9%) and Travelers (+4.4%) all posted upbeat earnings results. The Dow Jones index fell by 100 points or 0.3%. The S&P 500 index dipped 0.7%. The Nasdaq index shed 92 points or 0.9%.

US treasuries fell on Wednesday (yields higher) on market expectations the US Federal Reserve would remain aggressive in tightening rates. Federal Reserve Bank of St. Louis President James Bullard said it is important that Fed officials “follow through” on rate hikes to curb inflation. US 10-year yields rose by around 13 points to near 4.13%, the highest since July 2008. And US 2-year yields lifted by around 12 points to 15-year highs near 4.55%.


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Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$0.9842 to lows near US$0.9756 and was near US$0.9770 at the US close. The Aussie dollar eased from highs near US63.16 cents to lows near US62.52 cents and was near US62.70 cents at the US close. And the Japanese yen eased from 149.24 yen per US dollar to JPY149.89 and was near JPY149.85 at the US close.

Global oil prices jumped around 3% on Wednesday. US crude inventories fell unexpectedly last week – down 1.725 million barrels, weekly US government showed, against expectations for a build of 1.38 million barrels. The Brent crude oil price rose by US$2.38 or 2.6% to US$92.41 a barrel. And the US Nymex crude oil price added US$2.73 or 3.3% to US$85.55 a barrel.

Base metal prices were mixed on Wednesday. Lead fell the most, down by 1.5%, but zinc rose by the most, up by 1.6%.

The gold futures price fell by US$21.60 an ounce or 1.3% to US$1,634.20 an ounce. Spot gold was trading near US$1,629 an ounce at the US close. Iron ore futures fell by US35 cents or 0.4% to US$94.86 a tonne.

Originally published by CommSec