Stocks react as Congress looks to vote on debt ceiling Wednesday

The Dow Jones Industrial Average fell on Tuesday as Wall Street considered the likelihood of Congress passing a tentative deal on raising the US debt ceiling.

The 30-stock index lost 50.56 points, or 0.15 per cent, to end at 33,042.78. The S&P 500 was flat to close at 4,205.52, after trading both above and below the flatline during the session. The Nasdaq Composite added 0.32 per cent to finish at 13,017.43, paring gains after trading up as much as 1.4 per cent earlier in the day.

President Joe Biden and House Majority Leader Kevin McCarthy reached an agreement to raise the debt ceiling and avoid a default over the weekend, with Congress set to vote on the legislation as early as Wednesday. Lawmakers have not signaled that they intended to return to Capitol Hill early to work on the deal. Both Republican and Democratic support is needed for the proposed bill to pass.

The agreement comes just days before the so-called X date on Monday, which is the earliest date the Treasury Department has signaled the US could default on debt obligations.

The Nasdaq was helped by a nearly 3 per cent rally in Nvidia The artificial intelligence-related stock reached a $1 trillion market cap — at one point in Tuesday’s session, as shares continued to rally following its strong earnings report last week.

In further AI news – Tech leaders plan to warn of artificial intelligence’s “existential” threat to humanity. More than 350 executives, researchers and engineers working in AI signed onto a one-sentence statement set for release today calling for mitigating the risks of AI, which they say are on par with nuclear war and pandemics. Signatories include Sam Altman of OpenAI and Demis Hassabis of Google DeepMind.

In Asian markets The Hang Seng China Enterprises index was down yesterday, pushing it 20 per cent lower from its peak in January. That temporarily placed it in bear market territory, although it rarely to close up 0.5 per cent.

In commodity news, the WTI crude oil price experienced a 4.4 per cent decrease, falling below $70 per barrel for the first time since May 4th, primarily due to concerns over a weakening physical market, ongoing recession fears, despite a tentative agreement on the debt ceiling.

Australia's battery metals market is expanding in the US due to President Biden's climate policy, aiming to develop clean energy supply chains and reduce reliance on China, while also considering the benefits of the Inflation Reduction Act, although China remains the primary market for Australia's minerals.

Overall, most US sectors closed mostly lower overnight. Consumer Discretionary was the best performer, whilst Consumer Staples was the worst.

Futures

The SPI futures are pointing to a 0.5 per cent fall.

Currency

One Australian dollar at 7:10 AM is buying 65.16 US cents.

Commodities

Iron ore futures are pointing to a 2.3 per cent fall.

Gold added 0.75 per cent. Silver lost 0.30 per cent. Copper fell 0.58 per cent and oil dropped 4.32 per cent.

Figures around the globe

Across the Atlantic, European markets closed lower. London’s FTSE fell 1.38 per cent, Frankfurt lost 0.27 per cent while Paris closed 1.29 per cent lower.

In Asian markets, Tokyo’s Nikkei added 0.30 per cent, Hong Kong’s Hang Seng rose 0.24 per cent while China’s Shanghai Composite closed 0.09 per cent higher.

Yesterday, the Australian sharemarket closed 0.11 per cent lower at 7209.

Ex-dividends

Metrics Income Opportunities Trust (ASX:MOT) is paying 1.62 cents unfranked
Metrics Master Income Trust (ASX:MXT) is paying 1.49 cents unfranked
Pengana International Equities (ASX:PIA) is paying 1.35 cents fully franked

Dividends payable

Acrow Formwork and Construction Services (ASX:ACF)
Autosports Group (ASX:ASG)
Janus Henderson Group PLC (ASX:JHG)
Kelly Partners Group Holdings (ASX:KPG)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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