Fear of worse to come sparked a rush to investment safe havens even as the head of the U.S. central bank, Jerome Powell, hinted at a pause in rate hikes and the promise of a soft economic landing, or mild recession.

But as Powell was adding 0.25% to U.S. rates, which cleared 5% for the first time since 2007, the Pacific Western Bank teetered on the edge of bankruptcy, days after its bigger rival First Republic was seized by government regulators and sold to J.P. Morgan Chase.

Ripples from what’s happening in the U.S. financial sector have quickly circled the global financial system, washing up in places such as the oil market where worry about a downturn in demand drove the price of Brent quality crude down to US$70 a barrel, the lowest in 18 months and down 17% in a month.

Other commodities have started to be influenced by wobbles in the U.S., which include a political stand-off over the country’s debt limit.

Locally, the Reserve Bank piled pressure on borrowers but pleased savers with its own 0.25% rate increase, taking its prime rate to 3.85% with ANZ Bank forecasting a final 0.25% increase in August which could mean a terminal rate of 4.1% with rate cuts by Christmas if the economy has stalled or next year if consumers spending doesn’t slow.

Copper, the most important of the industrial metals and a bellwether of future economic activity, slipped marginally to US$3.83 a pound before a modest recovery, taking its decline over the past month to 3% and 9% over the past 12-months.

For Australia, the latest bout of instability on financial markets comes at a delicate time with the government introducing its budget to Parliament on Tuesday with spending plans underpinned by commodity price assumptions and future tax revenue from business activity.

The lower copper price and signs of weakness in other commodities, including iron ore, is causing questions to be asked of the budget before it is published.

Citi, a leading investment bank, added to the cheerless mood with a mid-week forecast that copper would continue to slide, perhaps touching US$3.63/lb, thanks to “weak global demand and high finished goods inventory, together with improving supply”.

Gold and its sister metal, silver, were better placed as the economy darkened with Citi refreshing its gold price forecast of US$2300/oz while silver, which is up 3% this week at US$25.70/oz, could reached US$28/oz over the next three months and US$30/oz by the end of the year.

Iron ore, according to Citi, will trade in a narrow band between US$100/t and US$105/t while lithium appears to have bottomed and could soon be trending up.

On the Australian market, this witches brew of competing (but mainly negative) news saw the all-ordinaries index fall by 1.5%, taking it back to roughly where it was 12-months ago. The gold index rose by 1.2% this week, meaning it is up 28% since Christmas.

Gold, as mentioned, was the star of the show this week even though it showed signs of retreating from its all-time to around US$2044/oz, a price which converts of an Australian gold price of A$3050/oz at the latest exchange rate of US67c.

Most gold producers rode higher with the price, some comfortably outstripping the latest investment bank price tips, including Northern Star, which gained 36c over the week to trade around $13.90 just as RBC Capital Markets said, in a “missed-the-boat” report, that the stock is a buy with the price target of $13.25.

Other gold moves included De Grey, down 3c to $1.59. Evolution, up 26c to $3.85. Bellevue, down 3c to $1.38. Gold Road, up 7c to $1.94, and Orecorp, down a surprise 2c to 40c even as Bell Potter refreshed its buy tip and target price of 97c.

Lithium stocks, largely on the losing side of the ledger since Christmas, stormed back into favour thanks to a modest price increase and reports from China that converters which turn lithium into battery-grade material had started re-stocking.

A secondary, but powerful boost for Australian lithium companies came in the form of an own goal kicked by the government of Chile, which is edging towards classic South American resource nationalism, driving its biggest lithium players to more friendly markets.

Albemarle, the big U.S. producer with extensive interests in Chile, voted with its wallet by announcing a major expansion of its Kemerton lithium hydroxide plant in WA even as it persists with an attempt to acquire emerging lithium miner, Liontown, which rose by 4c this week to an all-time high of $2.77, before easing to $2.75.

Other lithium moves included Pilbara, up 17c to $4.23. Allkem, down 1.5c to $12.04. Global, up 11c to $1.42. IGO, which also has nickel interests, up 77c to $13.96, though Macquarie Bank sees the stock rising to $20.

Vulcan, the locally listed German-focused lithium and energy project developer, traded up to $6.16 on Wednesday before asking for a suspension while it wrapped up a $109 million placement to buy long lead time equipment.

The fresh capital raised by Vulcan was the icing on a busy week of funding which saw a procession of miners unveil share issues to top up cash reserves, including:

  • Peak Resources, a rare earth project developer, finalising a $27.5 million share placement.
  • Aura Energy raising $10 million to support its Tiris uranium project in Mauritania.
  • Alliance Nickel receiving the first $12.7 million from European car maker Stellantis for nickel and cobalt production from its NiWest laterite nickel project in WA, and
  • Revolver Resources raising $5 million to accelerate work on its Osprey and Dianne copper projects in Queensland.

Other small companies to raise capital included QMines ($3 million). Legend Mining ($6 million). Triton Minerals ($5 million). Nickel Search ($2.4 million). Magnetic Resources ($3.24 million), and Impact Minerals ($4 million).

Iron ore stocks weakened as concern grew about the economic outlook which could dim demand for steel. Fortescue Metals slipped 68c to $20.27 even as it celebrated the first magnetite concentrate from its Iron Bridge project. Champion Iron was 14c weaker at $6.28.

Copper and nickel stocks, increasingly treated as battery metal plays, had a mixed week with one outstanding performer in low-key Greentech which rose by 14c (174%) to 23c after reporting encouraging assays from its Austin project in WA, including 5.4% copper over a narrow one metre intersection.

Sandfire was one of the only other copper stocks to rise, but only just, up 8c to $6.43 while Carnaby slipped 7c lower to $1.19 and 29Metals eased down by 4.5c to $1.15c.

Centaurus Metals was the pick of the nickels, up 5c to 86c after announcing first nickel sulphate from its Jaguar project in Brazil, though the more interesting development was Mincor trading up to $1.41, 1c above the price of Andrew Forrest’s takeover bid and a sign that some investors are trying to squeeze a bit more out of the iron ore billionaire.

Caspin Resources was the pick of the rare earth sector with a rise 3.5c to 34c after reporting encouraging drill results from its Mount Squires project in WA where a hit of 0.71% rare earth oxides over 46m was reported this week. Lynas, the sector leader, was steady at $6.47, while Hastings added 1.5c to $2.

Other news and market moves included:

  • Chalice lost 22c to $7.66 after reporting fresh early-stage exploration success at its Gonneville project north of Perth with a best hit of 32m at 2.2 grants per tonne 3E (palladium, platinum, and gold) and 0.2% nickel, estimated to be the equivalent of 1% nickel.
  • Develop Global was described by Bell Potter as a unique mine builder with its hybrid business model that deserved a buy tip and price target of $4.20, well ahead of last sales at $2.94, and
  • 92Energy added 6c to 40c after reporting high grade uranium intersections from drilling at its Gemini prospect in Canada with a best hit of 0.5m at 9.66% uranium, within a 5m zone assaying 1.47% uranium.