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Wall Street finishes mixed as uncertainties linger

Wall Street

Wall Street ended mixed after the sharp rebound last Friday as investors were awaiting more clues for the Fed's policy ahead of the key CPI data later this week. The Fed's quarterly Senior Loan Officer Opinion survey showed that requirements got tougher for commercial and industrial loans, warning of the tightening credit conditions ahead. But risk sentiment was relatively relaxed as the VIX fell 1.16% to 17. Growth-sensitive commodities, including oil and copper, rebounded for the third straight trading day, which buoyed commodity currencies, including the Australian dollar, the Canadian dollar, and the New Zealand dollar.  While US bond yields climbed higher, the surge in gold lost steam, though the precious metal inched up.

The reluctant moves on Wall Street suggest that uncertainties linger amid the recent regional bank’s rout, the US debt ceiling issue, and the unsure Fed’s policy path. At the Berkshire Hathaway annual shareholder’s meeting, Warren Buffett said the economy was slowing down and expected an earnings decline in most of his businesses.

A slew of China’s economic data will be due for release from Tuesday to Thursday, providing clues to its economic recovery. It is also worth knowing that both Australian Westpac and ANZ bank expected upcoming downturns after reporting a record half-year profit, again suggesting credit conditions get tougher. Asian markets are set to open mixed, with the ASX 200 futures down 0.11%, Hang Seng Index down 0.19%, and Nikkei 225 futures falling 0.31%.

Price movers:

  • Growth sectors continued to outperform and led the S&P 500 to gain, but 7 out of 11 sectors finished lower, with real estate stocks leading losses due to higher rates, down 0.69%, while telecommunication services outperformed, up 1.27%. Energy, financials, and consumer discretionary also finished higher, up 0.07%, 0.21%, and 0.3%, respectively.
  • PayPal’s shares slumped 5.7% following weaker-than-expected guidance, despite a beat on earnings expectations. The company reported earnings per share at $1.17, topping an expected $1.09. The revenue was $7.04 billion, about 1% above an estimated $6.98 billion. However, the payment company expected less growth from operating margins, despite an upgrade in earnings per share and revenue, suggesting the growth hurdles of high costs remain.  
  • Oil prices rose for the third straight trading day amid recovering risk sentiment. China’s economic data, including trading balance, new yuan loans, CPI, and PPI, will crucial to steer the oil market demand outlooks.  .
  • Cryptocurrencies slid on contagious effect after Binance temporarily paused withdrawals. The world-largest crypto exchange encountered 40,000 Bitcoin transactions queuing for cash out at a point on Monday, which may have been sparked by a surge in the memecoin’s withdrawal. The transaction fee rose 4 times to a record high. Bitcoin fell 4.9% to just above 27,500 in the last 24 hours amid the rout. Head-and-shoulder top pattern surfaces and may take the coin back to 25,000  from a technical perspective

ASX and NZX announcements/news:

  • Australian Commonwealth Bank (ASX: CBA) reported 1 increase in its cash profits to A$2.6 billion in its trading update. But the bank mentioned its net interest margins faced competitive pressures. The loan impairment expense was at $223 million, with collective and individual provisions slightly higher. A strong balance sheet remained, with a customer deposit and funding ratio at 75%.

Today’s agenda:

  • Australian Westpac consumer sentiment for May
  • China’s trade balance for April
  • Australian budget release 


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