In US economic data, both headline and core measures of consumer prices rose just 0.1 per cent in July, just below forecasts. Housing starts rose by 15.7 per cent to a 1.093 million annual rate in July, well above forecasts centred on a result near 969,000. And weekly chain store sales were up 3.7 per cent on a year earlier, down from 4.8 per cent in the previous week.
European shares rose again on Tuesday. Investors were comforted by stabilisation of the Ukraine crisis and encouraged by US economic data. The FTSEurofirst 300 index rose by 0.6 per cent with the German Dax up 1 per cent and UK FTSE lifted by 0.6 per cent. Australia's major miners were mixed in London trade with shares in BHP Billiton down by 4.9 per cent in response to its earnings result while Rio Tinto lifted by 0.1 per cent.
US sharemarkets rose on Tuesday. A lift in housing starts boosted housing-dependent stocks. And shares in Home Depot soared by 5.6 per cent in response to its earnings result, in turn serving to lift shares in the consumer discretionary sector. Shares in Apple rose 1.4 per cent to $100.53 a share. The Dow Jones index rose by almost 81 points or 0.5 per cent with the S&P 500 index up by 0.5 per cent while the Nasdaq gained 19 points or 0.4 per cent to fresh 14-year highs.
US treasury prices were little changed on Tuesday. While economic data was positive and sharemarkets were in favour, investors were cautious ahead of a speech by the Federal Reserve chair on Friday. US 2-year yields were flat at 0.43 per cent while US 10-year yields were flat at 2.40 per cent.
Major currencies ended weaker against the US dollar after European and US sessions on Tuesday. The euro eased from highs near $US1.3360 to around $US1.3310, before ending US trade near $US1.3320. The Australian dollar eased from highs near US93.40c to US93.00c before ending the US session close to US93.05c. And the Japanese yen eased from 102.53 yen per US dollar to JPY102.90, ending US trade near the weakest levels.
World oil prices fell to 14-month lows on Tuesday. The US dollar rose, making commodities more expensive for buyers in Asia and Europe. And world supplies of crude remain plentiful despite a number of geopolitical risks. Brent crude fell by US4 cents to $US101.56 a barrel and the US Nymex price eased by $US1.93 a barrel or 2.0 per cent to $US94.48 a barrel.
Base metal prices rose by up to 1.1 per cent on Tuesday with lead and zinc up the most. But copper lost 0.6 per cent and tin fell by 0.1 per cent. Gold prices fell again on Tuesday as the US dollar rose with the Comex gold futures quote down by $US2.60 or 0.2 per cent to $US1,296.70 per ounce. Iron ore fell by US30c on Tuesday to $US93.00 a tonne.
Ahead: In Australia, the Reserve Bank Governor gives testimony to the House of Representatives Economics committee. In the US, weekly mortgage finance data is released with the minutes of the last Federal Reserve meeting.
Craig James is chief economist at Commsec.