The US Federal Reserve issued its twice-yearly monetary policy report to Congress, saying that “The Committee’s commitment to restoring price stability – which is necessary for sustaining a strong labor market – is unconditional.”

In US economic data, industrial production rose by 0.2% in May (survey: +0.4%) to be up 5.8% on the year. The Conference Board leading index fell by 0.4% in May as expected.

European sharemarkets were mixed on Friday. Oil & gas shares fell by 4% but technology rose by 1.3% and retail rose by 0.9%. The pan-European STOXX 600 index rose by 0.1% but fell by 4.6% over the week. But while the German Dax index lifted 0.7% on Friday, the UK FTSE index fell by 0.4%. In London trade, shares of Rio Tinto fell by 4.9% and BHP fell by 3.3%.

US sharemarkets were mixed on Friday. The energy sector fell 5.6% but communication services rose 1.3% and consumer discretionary rose by 1.2%. The Dow Jones index fell by 38 points or 0.1%. The S&P 500 index rose by 0.2% and the Nasdaq index lifted by 152 points or 1.4%. Over the week the Dow fell by 4.8% – the biggest weekly fall since October 2020. The S&P 500 fell by 5.8% – the biggest fall since March 2020. The Nasdaq fell by 4.8%.

US long-term treasuries rose on Friday (yields lower). Manufacturing output unexpectedly fell 0.1% in May. Minneapolis Fed President Neel Kashkari said on Friday that the Fed should be “cautious” about raising rates too much too fast. US 10-year yields fell by 8 points to near 3.23%. But US 2-year yields rose by 1 point to near 3.17%. Over the week US 10-year yields rose by 6 points with 2-year yields up by 10 points.

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0530 to lows near US$1.0445 and was near US$1.0500 at the US close. The Aussie dollar fell from highs near US70.00 cents to lows near US69.00 cents and was near US69.30 cents at the US close. And the Japanese yen eased from near 133.90 yen per US dollar to JPY135.40 and was near JPY134.95 at the US close.

Global oil prices fell on Friday by 5.6-6.8% on fears that interest rate hikes would slow global economies and therefore reduce demand for oil. The Brent crude price fell by US$6.69 or 5.6% to US$113.12 a barrel. And the US Nymex crude price fell by US$8.03 or 6.8% to US$109.56 a barrel. Over the week Brent fell by 7.3% and Nymex fell by 9.2%.

Base metal prices were mostly lower on Friday. Tin fell the most, down 2.6%, but nickel bucked the trend, up 1.6%. Over the week metals fell by as much as 11.7% (tin) while zinc fell 3.5%.

The gold futures price fell by US$9.30 or 0.5% to US$1,840.60 an ounce. Spot gold was trading near US$1,839 an ounce at the US close. Over the week gold fell by US$34.90 or 1.9%. The iron ore futures price fell by US$3.66 or 2.7% to US$131.38 a tonne. Over the week, iron ore fell by US$10.99 a tonne or 7.7%. Ahead: No major economic data is scheduled in Australia. Chinese loan prime rates are announced. US financial markets are closed in observance of the Juneteenth National Independence Day holiday.

Originally published by CommSec