In US economic data, the ISM services index rose from 56.7 to a 4-month high of 56.9 in August (survey: 55.3). But the final S&P Global services index dipped from 47.3 to 43.7 in August (survey: 44.2).

European sharemarkets closed higher on Tuesday. The panEuropean STOXX 600 index rose by 0.2% with auto stocks up 1.9%. The German Dax index lifted 0.9% with Volkswagen shares up 3.7% on its decision to trigger an IPO of its sports car brand Porsche. And the UK FTSE index rose by 0.2% on reports that incoming UK Prime Minister Liz Truss could freeze energy bills. In London trade, shares in Rio Tinto were little changed but BHP shares slid 2.0%.

US sharemarkets tumbled on Tuesday as a stronger-thanexpected reading on the US services sector fuelled expectations that the US Federal Reserve will keep raising interest rates to combat inflation. US government bond yields soared, weighing on ratesensitive shares of Amazon.com (-1.1%), Apple (-0.8%) and Microsoft (-1.1%). At the close of trade, the Dow Jones index fell by 173 points or 0.6%. The S&P 500 index dipped 0.4%. And the Nasdaq index lost 86 points or 0.7%, its seventh consecutive day of losses and longest losing streak since November 2016.

US treasuries were weaker on Tuesday (yields higher) on expectations that the US Federal Reserve will keep hiking interest rates to battle soaring prices and as a slew of US corporate debt supply weighed on the market. US 10-year yields rose by around 15 points to near 3.34%. And US 2-year yields lifted by around 11 points to near 3.51%.

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$0.9984 to lows near US$0.9865 and was near US$0.9900 at the US close. The Aussie dollar dipped from highs near US68.00 cents to lows near US67.25 cents and was near US67.30 cents at the US close. And the Japanese yen eased from near 140.90 yen per US dollar to JPY143.05 and was near JPY142.80 at the US close.

 

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Global oil prices were mixed on Tuesday, ending a two-day rally after OPEC and its allies including Russia agreed to reduce crude production by 100,000 barrels a day on Monday. Traders fretted about the impact of Chinese Covid-19 lockdowns and the prospect of more interest rate hikes on oil demand. The Brent crude oil price fell by US$2.91 or 3.0% to US$92.83 a barrel. But the US Nymex crude oil price added US1 cent or less than 0.1% to US$86.88 a barrel.

Base metals were mixed on Tuesday. Aluminium prices fell by 1.6% to 17-month lows as a strong US dollar and worries over economic growth overshadowed production cuts in Europe. Tin lost 1.9% but lead rose by 1.0% with copper up 0.3%.

The gold futures price fell by US$9.70 an ounce or 0.6% to US$1,712.90 an ounce. Spot gold was trading near US$1,700 an ounce at the US close. Iron ore futures slid US86 cents or 0.9% to US$97.61 a tonne as investors grapple with the impact of fresh Covid-19 restrictions in China.

Ahead: In Australia, the national accounts, including GDP, are released. Chinese trade data is scheduled. In the US, the trade balance is released with the US Federal Reserve’s Beige Book.

Originally published by CommSec