Stay on top of Thursday’s top 5 market news By

© Reuters.

By Geoffrey Smith and Ana Beatriz Bartolo – Federal Reserve Chairman Jerome Powell heads to the US House of Representatives for a second day of testimony as monetary tightening continues from the Philippines to Norway and, likely, Egypt and Mexico.

Germany sounds the alarm over supply after Russia shuts off the tap and government stock data is delayed by technical issues.

The fiscal situation in Brazil is once again a matter of concern for investors.

Here’s what you need to know in the financial markets on Thursday, June 23rd.

CHECK IT OUT: Economic Calendar

1. Powell returns to Congress

Federal Reserve Chairman Jerome Powell addresses the House of Representatives today for the second day of his on the state of the US economy. Powell told the Senate on Wednesday that the risks of a recession have increased, but that the central bank will still prioritize reducing the .

Powell will take his seat minutes after the week’s update on the , which has been trending smoothly but still clearly upwards in recent weeks.

In addition, monetary policy tightening around the world continued, with the bank raising its benchmark rate by 50 basis points to 1.25%, more than expected. The shares also rose, but only by 25 basis points, while the base rate remained stable. The central banks of the and the are expected to rise by 50 and 75 basis points, respectively, when they meet later.

2. Fiscal risk returns to concern

President Jair Bolsonaro’s (PL) crusade against rising fuel prices, motivated by his electoral ambitions, is raising the market’s fiscal concerns. The government and its allied base are discussing raising the Voucher Caminhoneiro – an aid to lessen the cost of fueling diesel – from R$400 to R$600, but some newspapers are also discussing the possibility of the new value being R$1,000. There are also conversations about increasing the value of the gas voucher and increasing Auxilio Brasil.

The idea would be to include these measures in PEC 16, under discussion in the Senate, which authorizes the Union to compensate states that zero the ICMS rate on diesel and cooking gas and set the tax at 12% on . Compensation would be accounted for outside the spending cap rules.

The BRL 600 Trucker Voucher would cost BRL 3 billion to the public coffers, while doubling the value or scope of the gas voucher would come out close to BRL 2 billion.

The Minister of Economy, Paulo Guedes, has been trying to avoid these expenses in recent months and the president of the Senate, Rodrigo Pacheco (PSD-MG), has also shown resistance to the ideas, saying yesterday that it is necessary to be responsible with the spending ceiling. The concern is also how these benefits would be interpreted by the Electoral Law and how it would be possible to make this budget viable and keep the government’s accounts in the dark.

At 8:09 am, the ETF (NYSE:) was trading up 0.94% at $28 on the US premarket. Petrobras (NYSE:) ADRs were up 1.22% and Vale’s (NYSE:) were up 1.52%.

JOIN: Survey on Cryptocurrencies; We want to know your opinion

3. American stock market

US equity markets are set to open moderately higher as investors adjust to the latest comments on the economic outlook from Powell and others.

At 8:10 am, futures for the 100 were up 0.48%, while the futures for the 100 were up 0.74% and the 100 was up 1.12%. All three dropped between 0.1% and 0.2% after Powell’s first day of testimony.

Stocks likely to be in focus include Accenture (NYSE:) (SA:) and Darden Restaurants (NYSE:) (SA:), which report their earnings before the opening. They will provide an insight into current trends in business investment and consumer spending, respectively. FedEx (NYSE:) (SA:), a benchmark for online shopping and the wider economy, reports its numbers after closing.

CHECK: Real-time US stock quote in premarket on Wall Street

4. The European economy slows down even further

Business activity in the euro zone fell to its lowest level in 16 months in June, with rising prices dampening demand and souring economic prospects.

S&P Global’s June composite purchasing managers’ index – which combines data from the currency bloc’s services and manufacturing sectors – fell to 51.9 points, down from 54.8 in May and below analyst estimates.

S&P also said the UK economy was “running on a vacuum” after business expectations fell to their lowest level in nearly a year and a half. The latest in a series of weak UK data comes ahead of two secondary elections on Thursday, which are expected to show a major upset against the ruling Conservative Party.

CHECK: Quotation of the main global indices

5. Oil falls after large increase in API inventories

Oil prices fell on upbeat noises from Tehran about prospects for a deal that could lead to the lifting of Western sanctions, easing the way into world markets for Iranian exports.

At 8:13 am, U.S. crude futures were down 0.41% to $105.75, while futures were down 0.21% to $111.51.

The US government said the weekly Energy Information Administration (EIA) inventory data will be delayed due to technical issues. Parallel API data from the oil and gas industry body on Wednesday showed the biggest weekly increase in crude inventories in more than two months.

Meanwhile, European Natural Gas Futures hit a new three-month high as Germany took a step closer to rationing natural gas supplies, activating the second phase of a three-part plan to ensure security of supply.

CHECK: Quotation of the main global commodities

The move formalizes other actions already taken by Berlin in recent days in response to a 60% cut in Russian gas supplies for reasons the government considers politically motivated. However, the government will not immediately activate a provision that would allow supplies to pass through price increases before contractually permitted adjustments.