On Wednesday, the US Federal Reserve increased its target range for the benchmark federal funds rate by 75 basis points for the third time to 3.00%-3.25%, a level last seen in early 2008.

In US economic data on Thursday, initial jobless claims rose by 5,000 to 213,000 in the past week (survey: 217,000). The Conference Board leading index fell 0.3% in August (survey: -0.1%). The Kansas City Fed factory index fell from 3 to 1 in September (survey: 5).

European sharemarkets closed lower on Thursday. The panEuropean STOXX 600 index fell by 1.8%, hitting its lowest level since February 2021, with real estate shares down 4.3%. The Swiss National Bank raised its benchmark interest rate from -0.25% to 0.5%. Norway’s central bank lifted its benchmark interest rate by 50 basis points to 2.25%. The German Dax index also fell by 1.8% and the UK FTSE 100 index slid 1.1%. The Bank of England lifted the
bank rate by 50 basis points to 2.25%. In London trade, shares in Rio Tinto rose by 2.3% and BHP shares lifted by 0.9%.

US sharemarkets tumbled for a second session on Thursday following the US Federal Reserve’s interest rate hike. A surge in US government bond yields weighed on rate-sensitive growth and technology shares. Apple (-0.6%), Amazon.com (-1.0%), Tesla (- 4.1%) and Nvidia (-5.3%) shares all fell. But shares of pharmaceutical company Eli Lilly gained 4.9% after UBS upgraded the stock. The Dow Jones index closed lower by 107 points or 0.4%. The S&P 500 index slid 0.8% and the Nasdaq index lost 153 points or 1.4%.

US treasuries were weaker on Thursday (yields higher). US 10- year yields rose by around 19 points to near 3.70%, the highest since 2011. And US 2-year yields lifted by around 12 points to near 4.12%, the highest since 2007. The yield curve between 2-year and 10-year notes was the most inverted since at least 2000.


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Major currencies were mixed against the US dollar in European and US trade. The Euro fell from highs near US$0.9902 to lows near US$0.9811 and was near US$0.9835 at the US close. But the Aussie dollar rose from lows near US65.74 cents to highs near US66.69 cents and was near US66.40 cents at the US close. And the Japanese yen rose from 145.91 yen per US dollar to JPY140.33 and was near JPY142.30 at the US close after Japanese monetary
authorities intervened in the foreign exchange market for the first time since 1998 to support the yen.

Global oil prices rose by 0.7% on Thursday in volatile trading focused on Russian oil supply concerns. But gains were capped by a slew of interest rate hikes around the world which could weigh on economic growth and crude demand. The Brent crude oil price rose by US63 cents or 0.7% to US$90.46 a barrel. And the US Nymex crude oil price added US55 cents or 0.7% to US$83.49 a barrel.

Base metal prices were mixed on Thursday. Tin was up 2.3% with aluminium 1.6% higher, but nickel fell by 1.6%.

The gold futures price rose by US$5.40 an ounce or 0.3% to US$1,681.10 an ounce. Spot gold was trading near US$1,671 an ounce at the US close. Iron ore futures rose by US18 cents or 0.2% to US$98.83 a tonne.

Originally published by CommSec