At the US Federal Reserve’s Listens event Chair Jerome Powell said the US economy may be entering a “new normal” following disruptions from the Covid-19 pandemic.

In US economic data, the S&P Global manufacturing index rose from 51.5 to 51.8 in September (survey: 51). And the services index rose from 43.7 to 49.2 (survey: 45.5) in September.

European sharemarkets closed lower on Friday. The panEuropean STOXX 600 index fell by 2.3%, taking weekly losses to 4.4%. The S&P Global euro zone composite purchasing managers’ index (PMI) fell from 48.9 to 48.2 in September (survey: 48.2). The German Dax index dipped 2.0% to its lowest level since November 2020. The UK FTSE 100 index also lost 2.0% after the UK government announced a raft of tax cuts, fuelling concerns that
heightened inflation could lead to higher rates.

US sharemarkets tumbled on Friday as surging interest rates and foreign currency turmoil heightened fears of a global recession. Shares of Marathon Oil (-10.9%) and Chevron (-6.5%) slumped as crude oil prices plunged. Costco shares slipped 4.3% after the retailer reported a decline in fourth-quarter profit margins. Shares of technology names Apple (-1.5%), Amazon (-3.0%), Microsoft (-1.3%) and Meta Platforms (-1.7%) all fell. The Dow Jones index closed
lower by 486 points or 1.6%. The S&P 500 index slid 1.7% and the Nasdaq index lost 199 points or 1.8%. Over the week, the Dow Jones fell by 4.0%, the S&P 500 dropped 4.7% and the Nasdaq shed 5.1%.

US treasuries were mixed on Friday. US 10-year yields fell by 2 points to 3.69% after hitting an 11-year high of 3.83% earlier in the session. But US 2-year yields rose by 8 points to 4.20% after reaching a 15-year high of 4.27%. Over the week US 10-year yields rose by 24 points with US 2-year yields up by 34 points.


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Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$0.9837 to lows near US$0.9668 and was near US$0.9690 at the US close. The Aussie dollar dipped from highs near US66.32 cents to lows near US65.12 cents and was near US65.25 cents at the US close. And the Japanese yen fell from near 142.09 yen per US dollar to JPY143.46 and was near JPY143.30 at the US close.

Global oil prices fell by around 5% on Friday to 8-month lows on fears that rising interest rates will tip major economies into recession, cutting demand for crude. The Brent crude oil price fell by US$4.31 or 4.8% to US$86.15 a barrel. The US Nymex crude oil price slid by US$4.75 or 5.7% to US$78.74 a barrel. Oil fell for a fourth straight week with Brent down by US$5.20 a barrel or 5.7%. And the US Nymex dropped by US$6.37 a barrel or 7.5%.

Base metal prices slumped on Friday amid mounting concerns about demand, especially in crisis-hit Europe. Tin dropped 6.7% with aluminium (-5.3%) recording a fourth straight weekly decline.

The gold futures price shed US$25.50 an ounce or 1.5% to a 2½- year low of US$1,655.60 an ounce. Spot gold was trading near US$1,643 an ounce at the US close. Gold slid US$27.90 an ounce or 1.7% over the week. Iron ore futures rose by US6 cents or 0.1% to US$98.89 a tonne. For the week, iron ore slid US37 cents or 0.4%.

Originally published by CommSec