Wall Street ran off a session high and finished lower after the Fed raised the interest rate by 25 basis points as expected. Chair Powell signaled a possible pause in the next meeting but data dependent. Fed’s rhetoric is turning more dovish than it was in the previous meetings but did not offer much of a shock as volatility stays at a low level, with the VIX up 3% to just above 18. The banking rout is certainly not over. PacWest Bancorp’s shares plunged 50% in after-hours trading as the bank is weighing a potential sale, two days after JPMorgan’s takeover of First Republic Bank.
Risk-off again prevailed in the broad markets on economic concerns, taking gold and bonds higher while the US dollar weakened further, further boosting haven currencies, such as Yen and the Eurodollar. Oil prices tumbled again, with the WTI futures slumping under $70 per barrel.
The US private sector added the most jobs in nine months, pointing to resilient non-farm payroll data later this week. But “good news” will perhaps be “good news” since Fed finally considered a pause. Investors will also keep an eye on Apple’s Q2 FY23 earnings due for release after the US markets close tomorrow. The earnings preview is here.
Futures point to a mixed open across Asian markets, with the ASX 200 futures down 0.49%, Hang Seng Index up 0.33%, and Nikkei 225 futures falling 1.34%
- All 11 sectors in the S&P 500 finished lower in the S&P 500, with energy and financial stocks leading losses again, down 1.92% and 1.19%, respectively. The defensive and defensive stocks were relatively resilient, with the healthcare and telecommunication sectors marginally down 0.11% and 0.17%, respectively.
- Apple is expected to announce a $90 billion share buyback program in its earnings report tomorrow. The tech giant usually announces share buybacks in the second fiscal quarter, with a total amount of $572 billion in share repurchases since 2012.
- Qualcomm’s shares fell 6% in after-hours trading due to a sharp decline in handset chip sales. The chipmaker’s earnings per share were at $2.15, in line with expectations. But the company’s guidance for the current quarter fell short of analysts’ estimates.
- Recession fears continued to slash oil prices, with the WTI futures tumbling under $70 per barrel. The intense sales were sparked by the recent regional banking crisis, which was considered an early sign of an economic recession, while China’s economic uncertainties loom after the country reported the first contraction of its manufacturing PMI in three months over the weekend.
- Gold soared for the second consecutive trading day as the US dollar weakened further. The Fed’s signal to pause rate hikes sent the bond yields down, continuing to lift gold prices. Gold prices may refresh all-time highs in the near future.
ASX and NZX announcements/news:
- Briscoe Group (NZX/ASX: BGP) announced that unaudited sales for the first quarter were A$181.2 million, up 2.82% from a year ago. The homeware sales increased by 2.85% to $109.9 million, and sporting goods sales were up 2.78% to $71.3 million.
- ikeGPS Group Limited (NZX/ASX: IKE)’s FY23 revenue was up 93% to A$30.8 million annually. The total cash receivables were at $23.2 million by 31 March 2023.
- New Zealand ANZ commodity prices for April.
- China’s Caixin manufacturing PMI for April.