In US economic data, the economy, as measured by GDP, contracted at a 0.6% annualised rate in the June quarter (third estimate, survey: -0.6%). Initial jobless claims fell by 16,000 to a 5- month low of 193,000 last week (survey: 215,000).
European sharemarkets tumbled on Thursday as a host of companies, including Swedish fashion retailer H&M (-5.9%), warned about the effect of rising inflation and costs on their operations. The continent-wide FTSEurofirst 300 index fell by 1.6%. German inflation soared by 10.9% over the year to September (survey: 10.2%). It was
the highest level in more than 25 years, strengthening the case for another 75 basis point rate hike from the European Central Bank. Porsche shares (+0.2%) made a solid debut on the Frankfurt stock exchange. The UK FTSE 100 index lost 1.8% after UK Prime Minister Liz Truss defended her economic plan that sent markets into turmoil.
US sharemarkets dropped on Thursday as US Federal Reserve officials gave no indication the US central bank would moderate or change its plans to aggressively raise interest rates to bring down high inflation. Shares of rate-sensitive technology heavyweights Tesla (-6.8%), Apple (-4.9%) and Nvidia (-4.1%) all slumped. Used car retailer Carmax’s shares dropped 24.6% after missing second-quarter earnings expectations. The Dow Jones index fell by 458 points or 1.5%. The S&P 500 index slid 2.1% to its lowest intraday level since November 2020. The Nasdaq index shed 314 points or 2.8%.
US treasuries resumed their sell-off on Thursday (yields higher) after St. Louis Fed President James Bullard said rates will probably need to be “higher for longer” than markets previously anticipated. Cleveland Fed President Loretta Mester said, “We’re still not even in restrictive territory on the funds rate.” US 10-year yields rose by
around 8 points to near 3.79%. And US 2-year yields lifted by around 10 points to near 4.20%.
Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$0.9636 to highs near US$0.9807 and was near US$0.9805 at the US close. The Aussie dollar firmed from lows near US64.35 cents to highs near US65.01 cents and was near US64.95 cents at the US close. And the Japanese yen strengthened from near 144.79 yen per US dollar to JPY144.26 and was near JPY144.50 at the US close.
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Global oil prices fell on Thursday as traders weighed concerns about crude demand against potential OPEC+ production cuts next week. Reuters reported that Russia is likely to propose a reduction in oil output by about 1 million barrels per day. The Brent crude oil price fell by US83 cents or 0.9% to US$88.49 a barrel. And the US Nymex crude oil price shed US92 cents or 1.1% to US$81.23 a barrel.
Base metal prices were mostly higher on Thursday. Aluminium (+3.9%) and nickel (+2.6%) jumped, with buying triggered by the possibility of the London Metal Exchange banning new Russian metal from the list of brands that can be delivered against the exchange’s contracts. Tin fell by 1.0%.
The gold futures price fell by US$1.40 an ounce or 0.1% to US$1,668.60 an ounce. Spot gold was trading near US$1,660 an ounce at the US close. Iron ore futures fell by US10 cents or 0.1% to US$98.42 a tonne.
Originally published by CommSec
