The US trade deficit widened from US$40.32 billion to an 18-month high of US$42.27 billion in May, above forecasts centred on a shortfall near US$40.3bn. Imports rose 2.9pct, outpacing a 2.4pct lift in exports. Meanwhile US chain store sales were 3.1pct higher in the past week than a year ago according to Redbook Research.

As widely expected, Moody´s has cut the credit rating of Portugal, lowing it two notches to A1. The outlook is stable.

European shares rose for a sixth day on Tuesday. Better-than-expected earnings from Alcoa boosted investor sentiment while shares in BP rose and BMW lifted sales guidance. The FTSEurofirst index rose by 1.9pct with the UK FTSE up 2.0pct and the German Dax lifted by 1.9pct.

US sharemarkets posted solid gains on Tuesday with investors heartened that the profit reporting season had got off to a good start. After the bell on Monday Alcoa reported better-than-expected earnings and its share price lifted by 1.2pct. The Dow Jones rose by 146 points or 1.4pct with the S&P 500 up 1.5pct, and the Nasdaq gained almost 44 points or 2.0pct. After the bell Intel reported earnings of 51 cents a share, above forecasts of 43 cents.

US treasuries fell on Tuesday (yields higher) as investors switched their attention away from safe-haven government bonds to equities. US 2yr yields rose 2 points to 0.67pct with US 10yr yields up 6 points to 3.12pct.

The Euro and commodity currencies rose against the US dollar over European and US sessions on Monday. The Euro rose from around US$1.2525 to US$1.2735, before ending US trade near its highs. The Aussie dollar lifted from lows near US86.95c to US88.40c, ending the US session near the highs. And the Japanese yen held between 88.05 yen per US dollar and JPY88.80, ending US trade near JPY88.65.

US crude oil prices rose to two-week highs on Tuesday with a solid start to the US earnings season boosting investor confidence. The Nymex crude oil contract rose by US$2.20 or 2.9pct to US$77.15. London Brent crude rose by US$2.28 to US$76.65 a barrel.

Base metal prices posted solid gains on the London Metal Exchange on Tuesday as solid earnings data from Alcoa led investors to embrace so-called ´riskier´ (growth-dependent) assets like equities and commodities. Metals rose between 0.6-2.3pct with lead doing best. The price of gold also rose in line with other commodities and in response to a weaker greenback. The Comex gold price rose by US$14.80 an ounce to US$1,213.50 with a range of US$1,196.50 to $1,218.80.

Ahead: In Australia, the Federal Government updates budget forecasts. The consumer confidence index is released. In the US, retail sales figures and minutes from the last Federal Reserve meeting are released.

Provided by comsec.com.au