In US economic data, the Dallas Federal Reserve manufacturing index improved from -22.6 points to -12.9 points in August (survey: -24).

European sharemarkets fell on Monday. Interest rate-sensitive technology stocks fell most (down 2.4%) as bond yields lifted on expectations of more global rate hikes. Germany’s 10-year yield rose 10 basis points to a two-month high. Financial markets are pricing in a two-thirds chance that the European Central Bank could hike rates by 75 bps in September, up from 24% last week. The pan-European STOXX 600 index fell by 0.8%. The German Dax index lost 0.6%. The UK sharemarket was closed for a holiday.

US sharemarkets fell on Monday as investors worried whether aggressive rate hikes by the Federal Reserve would drive the economy into recession. But energy stocks rose 1.5% in response to a higher oil price. Technology shares eased in response to higher interest rates. Shares in Apple fell by 1.4% and Microsoft lost 1.1%. Shares in Bristol Myers Squibb slid 6.2% after its drug candidate for preventing ischemia strokes missed the main goal in a mid-stage trial.

At the close of trade, the Dow Jones index was lower by 184 points or 0.6% after being down 311 points earlier in the session. The S&P 500 index fell by 0.7% and the Nasdaq index lost 124 points or 1.0%.

US treasuries were lower on Monday (yields higher). After Friday’s speech from the Federal Reserve chair, market pricing now indicates around a 65% chance the Fed will hike rates by 75 basis points at its September meeting. US 10-year yields rose by 8 points to 3.11%. And US 2-year yields rose by around 4 points to near 3.43% after earlier hitting a 15-year high near 3.49%.

 

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Major currencies were mixed against the US dollar in European and US trade with the greenback hitting a 20-year high at one point. The Euro rose from lows near US$0.9920 to highs near US$1.0025 and was near US$0.9995 at the US close. The Aussie dollar rose from lows near US68.40 cents to highs near US69.25 cents and was near US69 cents at the US close. And the Japanese yen held between 138.30 yen per US dollar and JPY138.90 and ended US trade near JPY138.70.

Global oil prices rose by near 4.1% on Monday. The concern is if Iran strikes a nuclear deal with the West and is permitted to export more oil, then the OPEC+ group would seek to cut production quotas. Also there are fears that fresh unrest in Libya could disrupt the
country’s ability to export oil. The Brent crude oil price rose by US$4.10 or 4.1% to US$105.09 a barrel. And the US Nymex crude oil price rose by US$3.95 or 4.2% to US$97.01 a barrel.

The London Metal Exchange was closed for a holiday so there were no new base metal price quotes.

The gold futures price fell by US10 cents an ounce to US$1,749.70 an ounce. Spot gold was trading near US$1,737 an ounce at the US close. Iron ore futures fell by US26 cents or 0.2% to US$105.12 a tonne.

Ahead: In Australia, building approvals is released. In the US, the JOLTs job openings data is released with home prices and consumer confidence.

Originally published by CommSec