In US economic data, the trade deficit rose from US$74.1 billionto US$78.2 billion in October (survey: US$80bn). Chain store sales in the latest week were up by 5.7% on a year ago, down from the 10.4% annual rise in the prior week. European sharemarkets were weaker on Tuesday as investors fretted about a global economic downturn. Optimism about an easing of Covid restrictions in China was offset by worries about the impact of higher interest rates on economies. The US Federal Reserve, Bank of England and European Central Bank all hand down rate decisions next week. Information technology fell by 1.5% with Healthcare down 1.2%. The continent-wide FTSEurofirst 300 index fell by 0.5% and the UK FTSE 100 fell by 0.6%.

US sharemarkets fell on Tuesday in response to fears of a global economic downturn. Investors are now pricing in a 91% chance of a 50 basis point rate increase by the Federal Reserve next week. Shares in Meta Platforms fell 6.8%, reacting to a report “on a EU ruling that said Facebook and Instagram should not require users to agree to personalized ads based on their digital activity.” At the close, the Dow Jones index was down by 351 points or 1.0%. The S&P 500 index fell by 1.4%. And the Nasdaq index lost 225 points or 2.0%.

US government bonds were firmer Tuesday (yields lower). US 10-year Treasury yields fell by 8 points to near 3.52%. And US 2-year Treasury yields fell by 4 points to near 4.35%.

Major currencies fell against the US dollar in European and US trade. The Euro fell from highs near US$1.0530 to lows near US$1.0465 and was near session lows in afternoon US trade. The Aussie dollar fell from highs near US67.40 cents to lows near US66.90 cents and was near lows in afternoon trade. And the Japanese yen held between 136 yen per US dollar and JPY137.40 and was near JPY137 in afternoon US trade.

Global oil prices fell by 3.5-4.0% on Tuesday to the lowest levels since late December 2021. Fears of a global downturn, reducing demand for oil, dominated sentiment. Reuters also noted that “the market was weighing the production impact of a price cap of US$60 per barrel on Russian crude imposed by Group of Seven (G7) nations, the European Union and Australia.” The Brent crude oil price fell by US$3.33 or 4.0% to US$79.35 a barrel. And the
US Nymex crude oil price fell by US$2.68 or 3.5% to US$74.25 a barrel.

 

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Base metal prices were mixed on Tuesday with copper up by 0.5% and aluminium down 0.2%. Prices were supported by the latest Covid news in China. Reuters reported that “residents of China’s capital were allowed into parks, supermarkets, offices and airports without a negative COVID-19 test on Tuesday.” The gold futures price rose by US$1.10 an ounce or 0.1% to US$1,782.40 an ounce. Spot gold was trading near US$1,772 an ounce at the US close. Iron ore futures rose by US81 cents a tonne or 0.8% to US$108.49 a tonne.

Ahead: In Australia, the National Accounts is released (includes measure of economic growth). In China the November international trade is released. In the US, unit labour costs, nonfarm productivity, consumer credit and weekly mortgage application data is released.

Originally published by CommSec