There were mixed messages overnight on Wall Street, with the Dow and S&P 500 falling on banking concerns but the Nasdaq lifting, boosted by Microsoft’s positive earnings.
Meta also had a good day but surged in after-hours trading.
“Meta’s share price soared 11.8% in after-hours trading to $234.10 after its earnings report, to be flirting with the resistance coming from the 200-week moving average at $232.59. Next up is US GDP data tonight, followed by the Fed’s preferred measure of inflation, Core PCE,” IG analyst Tony Sycamore wrote.
Of continuing issues with the bank he said, “Regional Bank, First Republic closed 29.75% lower at $5.69, falling further into the abyss. The lack of panic selling in other regional banking stocks overnight is a good sign that First Republic’s woes are unique amongst regional lenders, easing contagion concerns.”
Wall St’s ups and downs followed a loss for the ASX 200, which closed 0.6% in the red, dragged down by Utilities (-1.12%) and Materials (-0.71%).
Today, the ASX is set to slip again, with ASX 200 futures are down 0.3% to 7,306 at Wall St’s close.
What happened in the markets
Here’s what we saw (source Commsec):
In Europe
European markets were dragged down by a slide in healthcare stocks. Shares in the healthcare sector lost 2.5% in response to a proposed overall of laws governing the European Union pharmaceutical industry.
Reuters note the "proposal, which is the biggest overhaul of existing medical laws in two decades, is aimed at ensuring all Europeans have access to both innovative new treatments and generic drugs".
The continent-wide FTSEurofirst 300 index fell by 0.9%.
The UK FTSE 100 index lost 0.5%.
In the US
Shares in Microsoft (NASDAQ:MSFT) rose by 7.2% following its upbeat earnings result. In response, shares in Amazon (NASDAQ:AMZN) rose 2.4%. Despite better-than-expected first-quarter results and a US$70-billion share buyback plan, shares in Alphabet (NASDAQ:GOOGL) (Google parent) fell by 0.1%.
Shares of First Republic Bank (NYSE:FRC) fell 29.8% after a report suggested that the US Government was unwilling to intervene in the bank's rescue process.
- The Dow Jones index fell by 229 points or 0.7%.
- The S&P 500 index lost 0.4%.
- The Nasdaq index rose by 55 points or 0.5%.
Major currencies were mixed against the US dollar in European and US trade. The Euro rose from near US$1.0985 to US$1.1090 and was near US$1.1035 at the US close.
The Aussie dollar held between US65.92 cents and US66.18 cents and was near lows at US66.00 cents at the US close.
The Japanese yen eased from 133 yen per US dollar to JPY133.87 and was near JPY133.65 at the US close.
Commodities
Global oil prices fell 3.7% as investors continued to fret about the potential for recession in the US. But supporting prices was news that US crude inventories fell by 5.1 million barrels last week, in excess of an expected 1.5mb drop.
Brent crude fell by US$3.08 or 3.8% to US$77.69 a barrel.
The US Nymex crude oil price fell by US$2.85 or 3.7% to US$74.22 a barrel.
Base metal prices were mixed. The copper futures price rose by 0.1%. Zinc rose 2% with nickel up 1.6%. Aluminium futures lost 0.5%. The gold futures price fell by US$8.50 or 0.4% to US$1,996 an ounce. Spot gold was trading near US$1,990 an ounce at the US close. Iron ore futures fell by US89 cents or 0.8% to US$116.71 a tonne.
Will China become uninvestable?
It’s unlikely that investing in China will cease, however, Dymon Asia Capital chief executive Danny Yong says doing so could be risky and that some investors have underestimated their exposure to China risk.
Yong has urged investors who are overexposed to seek a more diversified portfolio as global market volatility increases and the Taiwanese presidential elections loom large in January 2024.
“I don’t know the outcome, but I think it’s going to be an extremely volatile period as we head into those elections,” Yong told the Australian Financial Review’s Alpha Live Summit.
Supporting the thesis was Minack Advisors founder Gerard Minack, who alluded to China’s relationship with Russia in military matters.
“This is above my paygrade and talk about military matters. But let’s say a scenario where Ukraine has a successful attack against the Russians, and they’ve got their backs against the wall, and China decides to supply arms to Russia. [Then], all of a sudden America imposes sanctions on China.
"I mean, this could happen within 12 months. It will be an absolute game changer for markets and that’s, to me, a non-zero probability.”
Kirin to buy Blackmores
Japanese beverages giant Kirin Corporation isn’t just into beer. It now has Australia’s health market in its sights.
Kirin has made a $1.9 billion takeover bid for Australia’s largest vitamins group Blackmores and the bid is backed by the company’s major shareholder Marcus Blackmore, son of founder Maurice Blackmore.
Blackmores new chairwoman Wendy Stops called the offer “appropriate long-term value”.
While an independent expert will assess the bid, the board is recommending it to shareholders.
Kirin owns the Lion beer business in Australia which makes brands including XXXX Gold and James Boag. Blackmore’s would become part of an offshore expansion into health drinks and probiotics.
The company is listed on the Tokyo Stock Exchange and has a market capitalisation of $23 billion.