US equities rallied overnight, with all three major indices gaining over 1% on strong economic data. Dow up 429 points (+1.26%). Dow at best up 510 points. Dow at worst down 33 points. S&P 500 up 1.22%, moving firmly above the 4400 level. NASDAQ up 1.15%, closing at its highest level in 14 months. US treasury yields slid after economic data pointed to easing inflation, helping offset worries about future rate hikes and boosting Microsoft and Apple shares to record highs. USD Index stumbled, down 0.81% following the ECB rate rise of 25bps. SPI Futures up 29 points (+0.41%).

Big economic day overnight. Initial jobless claims were sharply above expectations at 262k vs consensus of 249k, the highest reading since October 2021. Results reflect some softening in the US labour market after a prolonged period of tightness. US retail sales unexpectedly rose 0.3%, exceeding expectations of a 0.1% decline, following April’s 0.4% rise. Philadelphia Fed manufacturing contracted largely in line with expectations, whereas the NY Empire manufacturing unexpectedly expanded.

European markets are broadly down, STOXX 50 -0.3%, FTSE +0.3%, CAC -0.5%, and DAX -0.1%. After the ECB rose rates by 25bps for the eighth straight time to 3.5%, the highest level in 22 years. Eurozone inflation is still hot at 6.1%, more than three times the ECB’s 2% target. The Euro hit a 15-year high against the yen and a five-week high against the dollar following the rate rise. Australian dollar flat, down 0.09% to 68.79c.

• Gold rebounded 0.82% from a 3-month low as USD index slid lower.
• Copper reached a 5-month high, up 0.72% overnight on increased economic support in China.
• WTI crude rose 3.51%, and Brent gained 2.87% as IEA predicted global oil demand to rise by 6% between 2022 and 2028.
• Zinc -0.4% Nickel +1.06%, Aluminium +-0.07%, Lead +0.61%, Tin +1.77%.
• Bitcoin rose 2.34% overnight.
• 10-year yield: US 3.72%, Australia 3.95%, and Germany 2.49%.

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