US equities fell overnight as Fed chair Powell reinforced the banks objective to rein in inflation, pointing to more rate hikes. All three major indices clocked their third straight daily loss, closing off best levels after a stalled afternoon rally attempt. Dow Jones down 102 points (-0.3%). Dow at best up 44 points. Dow at worst down 178 points. S&P 500 down 0.52%, and NASDAQ down 1.21% driven by weakness in tech as future rate hikes spooked the market and enthusiasm around AI. VIX was strangely placid, down 4.9% its lowest reading since January 2020. Telsa -5.73% after Barclays downgraded its rating to equal weight from overweight, saying the recent rally was too sharp relative to fundamentals, Microsoft -1.33% and Google -2.09% were the heaviest drags. US treasuries initially rose on hawkish tone but finished flat, and the USD Index fell 0.46% to 102.09. ASX to slip, SPI Futures down 10 points (-0.14%).

European markets mostly down, weighed down by real estate stocks on rate hike jitters, STOXX 50 -0.5%, FTSE -0.1%, CAC -0.5%, and DAX -0.6%. UK CPI reading defied expectations (8.4%) and held at 8.7%, putting more pressure on BoE a day before it is expected to raise rates for the 13th time in a row. Markets now pricing in a 40% chance for a 50bps hike on Thursday, and nearly a 100% chance rates will reach 6% by December vs current 4.5%.

• Gold finished 0.19% lower overnight after hitting a three-month low on Powell's remarks.
• Copper gained 0.64% as the dollar weakened. Optimism over Chinese demand for copper fades.
• Nickel -3.45% Aluminium -0.04% Zinc +2.33%, Lead +1.07%, Tin +2.45%.
• 10-year yield: US 3.72%, Australia 3.93%, and Germany 2.40%.

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