Morning Report (6:10 AEST)
In US economic data, the consumer price index rose by 0.4% in May - the most in more than a year - while the core rate (excludes food and energy) rose by 0.3%. Economists were tipping 0.2% increases for both series. But housing starts fell by 6.5% to 1.001 million in May after rising by 13.2% in April. Economists had tipped a result near 1.034 million. And weekly chain store sales were up 3.5% on a year earlier, up from 3.3% in the previous week.
European shares rose on Tuesday as speculation grew about possible takeovers in the healthcare sector. The FTSEurofirst 300 index rose by 0.3% with the German Dax up 0.4% while the UK FTSE gained 0.2%. Australia´s major miners were mixed in London trade with shares in BHP Billiton down by 0.7% while Rio Tinto rose by 0.8%.
US sharemarkets rose modestly on Tuesday. Investors were generally content to sit on the sidelines ahead of the Federal Reserve decision. But high inflation data prompted some to move money from bonds to equities. Financial stocks rose with E*Trade up 7.7% and shares of Charles Schwab up 5.5%.The Dow Jones rose by 27 points or 0.2% with the S&P 500 index up by 0.2% and the Nasdaq lifted by 16 points or 0.4%.
US long-term treasury prices fell on Tuesday (yields higher) in response to higher-than-expected inflation data. US 2 year yields were up by 1 point to 0.484% while US 10 year yields were up by 5 points to 2.655%.
Major currencies fell against the US dollar over the European and US sessions on Tuesday. The Euro fell from highs near U$1.3575 to highs near US$1.3535, and closed US trade around US$1.3545. The Aussie dollar eased from highs near US93.65c to around US93.28c before finishing US trade around US93.37c. And the Japanese yen eased from 101.90 yen per US dollar to JPY102.23, ending US trade near JPY102.12.
World oil prices were again mixed on Tuesday. The continued fears of global supply disruptions emanating from the Iraqi crisis supported the Brent price. But a thawing of relations between western nations and Iran put downward pressure on the Nymex price. Brent crude rose by US51c or 0.5% to US$113.45 a barrel but US Nymex closed lower by US54c to US$106.36 a barrel.
Base metal prices rose by up to 2.6% on the London Metal Exchange on Tuesday with nickel leading the gains. But other metals rose up to 0.9% while aluminium lost 0.1%. The Comex gold futures quote fell for the first time in seven sessions, down by US$3.30 an ounce or 0.3% to US$1,272.00 per ounce. Iron ore rose by US30c a tonne or 0.3% on Tuesday to US$89.30 a tonne.
Ahead: In Australia, no major economic data is scheduled. In the US the Federal Reserve makes its monetary policy decision. Weekly mortgage data and the current account figures for the March quarter are also released.
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