The Australian market is set to open lower this morning with the ASX SPI 200 Futures trading down 92 points (-1.2%) to 7,593.
This follows the lead of US market overnight where the S&P 500 lost 1.6% — its largest daily fall since January — while the technology-focused Nasdaq Composite Index fell 2%.
Sending US markets lower was US jobs data that showed labour costs had increased by a more-than-expected 1.2% in the last quarter, marking another sign of continued inflation pressure and adding anxiety around the Federal Reserve’s rate decision on Thursday.
The Dow logged its worst month since September 2022 in April, falling 5%, while the S&P 500 slid 4.2% and the Nasdaq lost 4.4%.
Meanwhile, the oil price slid to its lowest price in a month as a potential ceasefire in the Middle East eased geopolitical tensions. This included talk of a potential agreement between Israel and Hamas to release hostages, which would likely de-escalate conflict in the region
What happened overnight?
(Source Commsec):
US markets
US share markets tumbled on Tuesday as investors weighed US economic data showing rising labour costs and deteriorating consumer confidence on the eve of a key US Federal Reserve policy meeting to decide the direction of interest rates. Rising US bond yields pressured rate-sensitive megacap growth stocks.
- Shares of Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOGL), Nvidia, Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) dipped between 1.5% and 5.6%.
- GE HealthCare (NASDAQ:GEHC) Technologies slid 14.3% after its first-quarter revenue missed analyst estimates.
- McDonald's (NYSE:MCD) fell 0.2% after the fast-food chain missed quarterly earnings estimates as same-store sales fell short of expectations.
The Dow Jones index fell by 570 points or 1.5%, the S&P 500 index dipped 1.6% and the Nasdaq index shed 325 points or 2%. In April, the Dow fell 5%, its worst month since September 2022. The S&P 500 slid 4.2% and the Nasdaq shed 4.4%. All three indexes snapped five-month winning streaks.
US government bond yields rose after US labour costs increased more than expected in the first quarter boosted by the rise in wages and benefits, reinforcing expectations that the US Federal Reserve will delay the start of its easing cycle to later in the year. The US 10-year Treasury yield rose by 7 points to 4.68% and the US 2-year Treasury yield jumped 6 points to 5.04%, the highest since November.
European markets
European sharemarkets closed lower on Tuesday, with autos falling 4.2% and basic resources stocks dipping 1.2%.
Data showed that annual eurozone inflation held steady at 2.4% in April, in line with estimates. Core inflation, which strips out energy, food, alcohol and tobacco, came in at 2.7% (survey: 2.6%). Gross domestic product (GDP) for the bloc rose 0.3% in the March quarter (survey: 0.1%).
- The continent-wide FTSEurofirst 300 index fell by 0.7% and was down 1.5% in April, the first decline since October.
- In London, the UK FTSE 100 index ended broadly flat but was up 2.4% in April.
Currencies
Currencies were weaker against the US dollar in European and US trade.
- The Euro fell from US$1.0734 to session lows near US$1.0665 at the US close.
- The Aussie dollar dipped from US65.36 cents to session lows near US64.70 cents at the US close.
- The Japanese yen eased from 156.74 yen per US dollar to JPY157.85 and was near JPY157.80 at the US close.
Commodities
Global oil prices fell on Tuesday on the back of rising US crude production, as well as hopes of an Israel-Hamas ceasefire. US crude output rose to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January in its biggest monthly increase since October 2021.
- The Brent crude price fell US54 cents or 0.6% to US$87.86 a barrel.
- The US Nymex crude price slid US70 cents or 0.8% to US$81.93 a barrel.
Base metal prices dipped on Tuesday.
- Copper futures slid 2% on slower manufacturing activity growth in top consumer China and a firm US dollar.
- Aluminium futures shed 0.2%.
The gold futures price fell US$54.80 or 2.3% to US$2,302.90 an ounce on Tuesday due to an uptick in the US dollar and US Treasury yields. Spot gold was trading near US$2,287 an ounce at the US close.
Iron ore futures rose by US37 cents or 0.3% to US$110.91 a tonne. Markets in China will be closed for a public holiday during May 1-3.
What’s on?
In Australia, home prices and manufacturing data are scheduled with selected living cost indexes. Amcor releases earnings and Mirvac Group issues a trading update.
In the US, the Federal Reserve (FOMC) hands down its interest rate decision.
On the small cap front
The S&P ASX Small Ordinaries lost 0.22% yesterday, while the ASX 200 gained 0.35%.
You can read more about the following throughout the day.