In testimony to the US House Financial Services Committee, US Federal Reserve chair, Jerome Powell, reiterated that the central bank is “strongly committed” to bringing down inflation. He also noted
that a recession is a “possibility.”

In US economic data, initial jobless claims fell by 2,000 to 229,000 last week (survey: 226,000). The S&P Global manufacturing index fell from 57 to 52.4 in June (survey: 56) and the services index dropped
from 53.4 to 51.6 (survey: 53.3). The Kansas City Fed factory index dipped from 23 to 12 in June (survey: 10).

European sharemarkets fell on Thursday as slowing euro zone business activity heightened economic growth worries. The euro zone S&P Global composite index fell from 54.8 to 51.9 in June (survey: 54). The pan-European STOXX 600 index shed 0.8% with Deutsche Bank shares down by 12.2%. The German Dax index lost 1.8% and the UK FTSE index shed 1.0%. In London trade, shares of Rio Tinto fell by 2.2% and BHP lost 1.1%.

US sharemarkets climbed on Thursday. The defensive S&P 500 utilities (+2.4%), consumer staples (+2.0) and healthcare (+2.2%) sectors countered declines in the energy (-3.8%) and materials (- 1.4%) sectors amid growing worries about a possible US recession. Technology shares outperformed as bond yields slipped, with Apple (+2.2%) and Microsoft (+2.3%) shares both higher. The Dow Jones index closed up by 194 points or 0.6%. The S&P 500 index added 1.0% and the Nasdaq index gained 179 points or 1.6%.

US treasuries rose on Thursday (yields lower) on concerns that the US Federal Reserve will cause a recession by aggressively hiking interest rates. US 10-year yields fell by 6 points to near 3.09% and US 2-year yields fell by 3 points to near 3.02%.

Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$1.0577 to lows near US$1.0483 and was near US$1.0520 at the US close. But the Aussie dollar rose from lows near US68.69 cents to highs near US69.25 cents and was near US69.00 cents at the US close. And the Japanese yen rose from 135.85 yen per US dollar to JPY134.28 and was near JPY134.95 at the US close.

Global oil prices fell as much as 1.8% on Thursday as investors weighed the risk that rising US interest rates could trigger a recession and cut demand for fuel. The Brent crude price fell by US$1.69 or 1.5% to US$110.05 a barrel. And the US Nymex crude price shed US$1.92 or 1.8% to US$104.27 a barrel.

Base metal prices were mixed on Thursday. Copper slid 4.3% to a 16-month low while tin dropped 6.7% on mounting global recession fears. But aluminium was flat and zinc rose by 0.4%.

The gold futures price fell by US$8.60 or 0.5% to US$1,829.80 an ounce. Spot gold was trading near US$1,825 an ounce at the US close. The iron ore futures price rose by US$2.30 or 1.8% to US$129.32 a tonne after Chinese President Xi Jinping pledged to achieve the country’s economic goals for the year. Ahead: Reserve Bank of Australia Governor Philip Lowe participates in a panel discussion. In the US, new home sales and consumer confidence data are both issued.

Originally published by CommSec