The European Central Bank (ECB) hiked its benchmark policy rates by 50 basis points. The deposit rate lifted to 2.5%, the highest level since November 2008. And the Bank of England raised the bank rate by 50 basis points to a 14-year high of 4%.
In the US, initial jobless claims fell by 3,000 to 183,000 last week (survey: 195,000). Factory orders lifted 1.8% in December (survey: +2.3%). Unit labour costs rose 1.1% in the December quarter (survey: +1.5%) with nonfarm productivity up 3% (survey: +2.4%). Challenger job cuts surged 136% to 102,943 in January (survey: +54,000), the highest January total since 2009.
European sharemarkets closed higher on Thursday, hitting their highest level in nearly a year. In a statement, the ECB pledged to “stay the course in raising interest rates significantly at a steady signalling that it intended to hike rates by another 50 basis points in March. Rate-sensitive real estate stocks were the top gainers, up 6.8%. The continent-wide FTSEurofirst 300 index gained 1.1%. Bank of England Governor Andrew Bailey said, “we’ve seen the first signs that inflation has turned the corner,” after hiking rates. In response, the UK FTSE 100 index rose 0.8%.
US sharemarkets were mixed on Thursday. Facebook parent Meta Platform’s shares soared 23.3% after reporting a fourth quarter beat on revenue and announcing a US$40 billion share buyback. Shares of Google parent Alphabet, Amazon.com and Apple rose by up to 7.4% ahead of their quarterly results. But shares of drug maker Merck slid 3.3% on a lower-than-expected annual forecast. At the close of trade, the Dow Jones index fell by 39 points or 0.1%. But the S&P 500 index gained 1.5% and the Nasdaq index added 384.5 points or 3.3%, with both around 5- month highs.
US government bonds edged higher on Thursday (yields lower) as investors digested a more dovish tone from the US Federal Reserve and prepared for a closely-watched jobs report on Friday. US 10-year treasury yields were steady near 3.40%. And US 2- year treasury yields dipped 1 point to 4.10%.
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Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.1022 to lows near US$1.0885 and was near US$1.0910 at the US close. The Aussie dollar dipped from highs near US71.55 cents to lows near US70.69 cents and was near US70.80 at the US close. But the Japanese yen rose from near 129.08 yen per US dollar to around JPY128.09 and was near JPY128.65 at the US close.
Global oil prices eased on Thursday as US factory orders for industrial equipment and other machinery fell, while the US dollar strengthened. The Brent crude oil price shed US67 cents or 0.8% to US$82.17 a barrel. And the US Nymex crude oil price dipped US53 cents or 0.7% to US$75.88 a barrel.
Base metal prices fell on Thursday as the US dollar strengthened and demand in top consumer China remained slack after the Lunar New Year holiday. The copper futures price fell 0.4%. And the aluminium futures price slid 0.1%.
The gold futures price fell US$12.00 or 0.6% to US$1,930.80 an ounce. Spot gold was trading near US$1,912 an ounce at the US close. Iron ore futures slid US$2.38 or 1.9% to US$123.95 a tonne as stubbornly high Chinese inventories undermined recent demand optimism.
Originally published by CommSec