Scoreboard: Rate expectations

Wall Street ended lower on fears that rates will rise sooner than expected, while European shares fell as miners lost ground.

In US economic data, weekly chain store sales were up 4.9 per cent on a year ago according the Redbook survey, an unchanged annual growth result on the previous week.

Thomson Reuters reported: "Research from Federal Reserve economists published late on Monday showed Fed members expect a higher trajectory for interest rates than investors, boosting bond yields and sending the US dollar to a 14-month high against the euro."

European shares fell on Tuesday with a higher US dollar in the Asian session putting downward pressure on base metal prices. The FTSEurofirst 300 index fell by 0.4 per cent with the German Dax down by 0.5 per cent while the UK FTSE lost 0.1 per cent. Australia's major miners were mixed in London trade with shares in BHP Billiton down by 1.0 per cent while Rio Tinto rose by 0.2 per cent.

US sharemarkets ended weaker on Tuesday with analysts debating the major reasons for the declines. Speculation of an earlier-than-expected rate hike weighed on sentiment. Shares in Apple fell after releasing new products including the Apple Watch. Shares in Apple fell by 0.4 per cent after earlier being up more than 4 per cent. The Dow Jones index fell by 97.6 points or 0.6 per cent. The broader S&P 500 index fell by 0.7 per cent while the Nasdaq lost 40 points or 0.9 per cent.

US treasury prices fell on Tuesday (yields higher) as investors speculated that the Federal Reserve could decide to lift interest rates earlier than expected. US two-year yields rose by three points to 0.56 per cent while US 10-year yields rose by two points to 2.50 per cent.

Major currencies were mixed against the US dollar over the European and US sessions on Tuesday. In the Asian session on Tuesday the Euro fell from highs near $US1.2910 to about $US1.2860. But over the European and US sessions the Euro rose to $US1.2960, settling at $US1.2945 at the end of the US session. The Aussie dollar fell from highs near US92.85c to lows near US91.85c before ending the US session near US92.05c. And the Japanese yen held between ¥106.04 per US dollar and ¥106.47, ending US trade near ¥106.17.

World oil prices were mixed in volatile trade on Tuesday. Ample global supplies weighed on oil prices and investors had to respond to a volatile US dollar. Brent crude fell by $US1.04 or 1.0 per cent to $US99.16 a barrel with the US Nymex price ending US9c a barrel higher at $US92.75 a barrel.

Base metal prices slumped on Tuesday, falling from between 1.6 per cent and 5.1 per cent with nickel down the most. Gold prices fell on Tuesday with the Comex gold futures quote down by $US5.80 an ounce or 0.5 per cent to $US1,248.50 per ounce. The iron ore price fell US40c or 0.5 per cent to $US83.60 a tonne.

Ahead: In Australia, consumer confidence data is released. In the US, the mortgage market index is released together with wholesale sales and inventories.

Craig James is chief economist at Commsec.

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