At a European Central Bank forum, US Federal Reserve Chair Jerome Powell said the central bank will not let the economy slip into a “higher inflation regime”: “our job is to literally prevent that from happening and we will prevent that from happening.”
In US data, the economy, as measured by GDP, contracted at a 1.6% annual pace in the March quarter (survey: -1.5%). MBA mortgage applications rose by 0.7% in the past week after a 4.2% increase in the previous week.
European sharemarkets fell on Wednesday. Investors noted the hawkish stance by global central bankers on inflation, concerned that higher interest rates could stifle economic activity. But German data on consumer prices printed below forecasts. The pan-European STOXX 600 index fell for the first time in four days, down by 0.7%. Real estate fell by 3.5%, auto lost 2.6% with banks and miners down by just over 1%. The German Dax index lost 1.7% and the UK FTSE index slipped 0.2%. In London trade, shares of Rio Tinto fell by 1.0% and BHP shares eased 0.1%.
US sharemarkets were mixed on Wednesday in choppy trade approaching the end of the month, quarter and first half of the year on Thursday. Energy lost 3.4% while healthcare rose 0.9%. The Dow Jones index rose by 82 points or 0.3%. But the S&P 500 index lost 0.1% and the Nasdaq index fell by 4 points or less than 0.1%.
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US treasuries rose on Wednesday (yields lower). US 10-year yields fell by 11 points to near 3.10% and US 2-year yields fell by 7 points to near 3.06%.
Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0535 to lows near US$1.0430 and was near US$1.0440 at the US close. The Aussie dollar held between near US68.60 cents and US69.00 cents and was near US68.80 cents at the US close. And the Japanese yen eased from 135.80 yen per US dollar to JPY137.00 and was near JPY136.65 at the US close.
Global oil prices fell by around 1.5-2.0% on Wednesday. While short-term supplies remain tight, investors remain worried about global oil demand in the face of rising interest rates. OPEC+ oil producers started a two-day meeting also on Wednesday. The Brent crude price lost US$1.72 or 1.5% to US$116.26 a barrel. And the US Nymex crude price fell by US$1.98 or 1.8% to US$109.78 a barrel.
Base metal prices were mixed on Wednesday. Lead, aluminium and tin fell by up to 2.1% while other metals rose, with nickel up 2.7%.
The gold futures price fell by US$3.70 or 0.2% to US$1,817.50 an ounce. Spot gold was trading near US$1,819 an ounce at the US close. The iron ore futures price fell by US17 cents or 0.1% to US$130.11 a tonne. Ahead: In Australia, data on job vacancies, private sector credit and engineering construction activity are released. In China, purchasing manager’s indexes (PMIs) are scheduled. In the US, weekly data on claims for unemployment insurance will be issued with personal spending and income figures, and the Chicago PMI.
Published by CommSec