In US economic data, initial jobless claims rose by 7,000 to 251,000 last week (survey: 240,000). The Conference Board leading index dipped 0.8% in June (survey: -0.6%). The Philadelphia Fed manufacturing index fell from -3.3 to -12.3 in July (survey: +0.8).

The European Central Bank (ECB) raised all three of its main policy rates by 50 basis points – the biggest hike since 2000 – for the first time since 2011. The main refinancing rate was hiked to 0.50%. The marginal lending facility increased to 0.75% with the deposit rate lifting to 0.00%. ECB President Christine Lagarde said, “we expect inflation to remain undesirably high for some time.”

European sharemarkets were mixed on Thursday as investors digested the oversized ECB rate hike and earnings results. The panEuropean STOXX 600 index rose by 0.4%. Italy’s FTSE MIB index dipped 0.7% after Prime Minister Mario Draghi resigned. The German Dax index lost 0.3% but the UK FTSE index rose by 0.1%. In London trade, shares of Rio Tinto were flat with BHP shares down by 0.4%.

US sharemarkets advanced on Thursday, despite mixed earnings results. Tesla shares rose by 9.8% after its quarterly results beat estimates. But shares of AT&T fell 7.6% after lowering its full-year free cash flow guidance. United Airlines’ results disappointed, pushing the stock down by 10.2%. And Carnival shares dipped 11.2% after the cruise company announced it was selling US$1 billion of stock. The Dow Jones index rose by 162 points or 0.5% and the S&P 500 index rose 1.0%, posting its biggest three-day rally since May 27. The Nasdaq index also added 162 points or 1.4%.

US treasuries were stronger on Thursday (yields lower) after the first interest rate hike in 11 years by the ECB turned investors’ focus toward an economic slowdown. US 10-year yields fell by around 16 points to near 2.88% and US 2-year yields dipped by around 16 points to near 3.09%.

Major currencies were mostly weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0275 to lows near US$1.0160 and was near US$1.0220 at the US close. The Aussie dollar eased from highs near US69.10 cents to lows near US68.58 cents and was near US69.25 cents at the US close. But the Japanese yen rose from near 138.86 yen per US dollar to near JPY137.40 at the US close.

Global oil prices tumbled around 3% on Thursday after the ECB interest rate hike stoked demand worries, while returning oil supply from Libya and the resumption of Russia’s gas flows to Europe eased supply concerns. The Brent crude price fell by US$3.06 or 2.9% to US$103.86 a barrel. And the US Nymex crude price shed US$3.53 or 3.5% to US$96.35 a barrel.

Base metal prices were mostly lower on Thursday as the ECB raised interest rates, stoking investor worries about a recession. Nickel rose by 1.4% but zinc fell by 2.8%.

The gold futures rose by US$13.20 an ounce or 0.8% to US$1,713.40 an ounce. Spot gold was trading near US$1,720 an ounce at the US close. The iron ore futures price fell by US74 cents or 0.7% to US$103.36 a tonne. Ahead: S&P Global purchasing managers’ indexes (PMIs) are due

Originally published by CommSec