EU and UK PMIs in focus ahead of Powell's second testimony

In Europe, markets gave back their gains from earlier in the week, trading lower on Thursday. In the US, markets initially opened more down but managed to rebound to gain some ground before closing marginally down. During today's European open, the primary focus will be on the latest flash PMIs for June from France, Germany, the UK, and the US. Further weakness is expected across the board due to higher prices and weakening demand.

Ten-year Treasury yields have fallen to an almost two-week low as investors fear a recession could be triggered by the Fed's commitment to tame inflation. While, trading expectations for higher Fed fund rates pushed the two-year yield up to 3.0693%, compared with a US close of 3.056%.

Later on Thursday, Powell will deliver his second semi-annual congressional testimony. As central banks raise interest rates to curb inflation, investors continue to assess the risks of the world economy entering a recession. In his testimony to the Senate Banking Committee, Fed Chair Jerome Powell emphasized their commitment to bringing inflation down at any cost and acknowledged a recession was a possibility.

Oil and base metals prices have fallen amid general concerns about waning global demand, despite tightening supplies due to the Russia-Ukraine conflict.

During early European trading, Brent crude prices hit a one-month low of just above $104 a barrel after recovering back to above $110. 

With iron ore falling more than 20% in recent weeks, it had already dropped to six-month lows, while copper hit a 15-month low overnight.

Events of today

Germany's flash manufacturing PMI fell to 54 in June, so investors eagerly await data from the EU and UK. They are also expected to point out increasing pressure on business activities in June. Manufacturing PMI for the European Union is forecast to drop to 53.9 from 54.6. UK PMIs are expected to remain unchanged in June, with numbers above the healthy 50-threshold.

US data front will be packed with initial jobless claims, expected to fall from 229K to 227K in the last week. 

The crude oil inventories report is also among the highlights for today. After an increase of 1.956 M barrels last week, inventories are expected to decrease by 569,000.