Low-volume night in the US dominated by Powell’s testimony (see below) which was seen as a little less hawkish. The Fed remains data dependent (seen as a positive). Tech stocks led with the NASDAQ up 1.18% and the other markets flat. The Dow Jones finished down 5 points (-0.01%) at worst down 116 points. The Bank of England raised rates by 50bp, more than expected, although the UK market (FTSE) only fell 0.76%. The odds of a Fed rate rise at the next meeting on July 26th rose from 74.4% to 76.9%. Weekly jobless numbers hit a 20 month high and the Leading Economic Index fell for the 14th time on the trot. The energy sector was the worst-performing sector on the back of a 4% fall in the oil price.

ASX to open lower SPI Futures down 7 points (-0.10%).

European markets are down for a third consecutive session. STOXX 50 -0.42%, FTSE -0.76%, CAC -0.79%, and DAX -0.22%. The BoE likely dampening sentiment as they raised rates to a 15-year high. 

Powell Testimony - Powell said the Fed will proceed with interest rate hikes at a "careful pace" as they approach the end of their monetary policy tightening phase. Powell has finished two days of Testimony, last night in front of the the Senate Banking Committee, he emphasised the need for a gradual approach which was seen as a positive. After ten consecutive rate hikes, the Fed skipped the June meeting, but is expected to resume raising rates in July. Further rate hikes are likely said Powell but he stressed the need to assess incoming information (they are data-dependent) and making decisions based on “economic conditions”. So rate hikes are not baked in, nor are they off the table. While most Fed dot plot points suggest two more quarter-point rate increases (one Governor suggests three) by the year-end the door is open to less aggressive hikes depending on data.

OVERNIGHT TABLE

US SECTORS

• US jobless claims remain at a 20-month high, indicating a softening labor market. Existing home sales in May saw a modest increase, although selling prices for existing homes experienced the largest year-over-year decline in over a decade, reflecting the uneven nature of the ongoing economic recovery.
• Meta Platforms announced that it will block access to news content on Facebook and Instagram for all users in Canada after the country's parliament passed legislation requiring internet giants to pay publishers for news. Meta gained 1.15% overnight.

• Gold finished 0.97% lower, hitting a 3-month low as Powell's testimony wrapped up.
• Copper rose 0.13% as Inventories in LME Warehouses hit the lowest level since October 2021
• Nickel -0.2% Aluminium -0.4% Zinc -0.17%, Lead +0.23%, Tin -0.42%.
• WTI Crude fell 4.66% and Brent fell 3.64% on fears interest rates will continue to climb, reducing demand for Crude.
• 10-year yield: US 3.79%, Australia 4.01%, and Germany 2.49%.

• The Japanese yen has slumped against major currencies, reaching its lowest level since November against the US dollar, as the Bank of Japan's monetary policy diverges from other central banks' tightening measures. The yen's weakness is driven by interest rate disparities.

HEADLINES

• ASX to slip, S&P 500 gets tech lift, BoE resets rate peak
• Wall Street ends higher as Powell wraps up testimony
• Stocks finish higher after Fed Chair's remarks
• Bank of England hikes rates to 5% in surprise move to tackle stubborn inflation
• Dollar, yields rise after Powell comments, Bank of England rate hike
• Fed's Powell says rate hikes will come at a "careful pace" from here
• Fed Chair signals gradual tightening of monetary policy
• Fed's Bowman says more rate increases needed
• Investors keep bets on U.S. rates soon topping out, despite Powell's hawkishness
• Market expectations suggest rates may soon reach a peak
• Biden, Modi hail new era for India, US relations amid flurry of deals
• Biden addresses Xi 'dictator' remark, says US-China relations unharmed
• Titanic sub suffered 'catastrophic implosion,' all five aboard dead
• Deutsche Bank plans to cut 10% of 17,000 German retail jobs - source
• Oil plunges 4% as interest rate hikes outweigh lower US oil supplies
• Investors increase bets on UK recession as rate hikes bite
• US jobless claims hold at 20-month high, existing home sales tick up in May
• Unemployment claims remain elevated, housing sales

ON THE CALENDAR

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FROM MT TODAY

• Pre-Market Podcast in the Morning email.
• Henry on ABC 774 with Virginia Trioli at 10:25 am.
• Members Podcast at Midday.
• End of Day Podcast in the End of Day email.