Fed Chair rhetoric supports markets as tech layoffs continue

 

Stocks advanced Tuesday following Federal Reserve Chair Jerome Powell’s comments that inflation was on the decline.The Fed Chair repeated post-FOMC meeting messaging during his appearance at the Economic Club of Washington, noting that the disinflationary process will be bumpy and further rate increases will likely be necessary. He stated that if strong labour market data continues, the Fed will raise rates, but he expects the labour market to soften

President Biden delivers his annual State of the Union address tonight at 9pm Eastern and is expected to raise concerns on big tech, call for increasing levies on share buyback under IRA and revive the billionaire tax.

Overnight the S&P 500 was up 1.3 per cent, while the Nasdaq Composite gained 1.9 per cent. The Dow Jones Industrial Average added 262 points, or 0.8 per cent. The major indexes ricocheted during and shortly after his remarks in a midday conversation at the Economic Club of Washington, D.C.

At one point, the Dow gained more than 275 points, while the S&P 500 and Nasdaq Composite each traded up more than 1 per cent, as investors cheered Powell’s comments on inflation.

In company news, Meta Platforms is making strides in the ongoing battle to return time spent back to its Instagram platform, and take share from TikTok, according to UBS. That’s evident in the fact that global time spent in January for Instagram rose 5 per cent year over year, while declining 6.4 per cent year over year for TikTok.

More tech layoffs ahead for Zoom which is laying off 15 per cent of its workforce, or 1,300 employees, due to slowing growth after the pandemic-driven increase, and CEO Eric Yuan is reducing his salary by 98 per cent and forgoing his bonus for the coming fiscal year.

The ailing retailer Bed Bath & Beyond is hoping to ride the meme-stock wave to secure the rescue financing it needs to avoid bankruptcy. Rather than venture into the pricey corporate debt market, the company is planning to issue about $1 billion worth of stock that it will use to pay down debt and fund its business. Shares of Bed Bath nearly are up nearly 250 percent since it warned of a possible bankruptcy filing early last month.

Overnight, S&P 500 sectors were mostly higher, with energy performing well due to the surging price of crude oil. Technology, communication services, and banks and insurance also had positive results, while consumer discretionary and defensive sectors were among the underperformers.

On the oil front, BP has dialled back its green transition plans. In reporting its highest-ever annual profit, the British giant said its oil and gas output in 2030 would be only 25 percent lower than in 2019, having once promised a reduction of 40 percent. It’s the latest sign that soaring energy prices are tempting oil giants to keep pumping out fossil fuels despite pressure to focus on renewable energy

Futures

The SPI futures are pointing to a 0.4 per cent gain.

Currency

One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 69.52 US cents (Tue: 68.82 US cents).

Commodities

Iron ore futures are pointing to a 0.7 per cent fall.

Gold added 0.2 per cent. Silver fell 0.1 per cent. Copper rose 0.9 per cent and oil gained 4.3 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. London’s FTSE added 0.4 per cent, Frankfurt lost 0.2 per cent while Paris closed 0.1 per cent lower.

In Asian markets, Tokyo’s Nikkei closed flat, Hong Kong’s Hang Seng added 0.4 per cent while China’s Shanghai Composite closed 0.3 per cent higher.

Yesterday, the Australian sharemarket closed 0.5 per cent lower at 7,504.

Ex-dividends

CD Private Equity I (ASX:CD1) is paying 8 cents unfranked
CD Private Equity II (ASX:CD2) is paying 6 cents unfranked
CD Private Equity III (ASX:CD3) is paying 11 cents unfranked
Flagship Investments (ASX:FSI) is paying 4.75 cents fully franked
ResMed Inc (ASX:RMD) is paying 4.3368 cents unfranked

Dividends payable

Advanced Share Registry (ASX:ASW)
New Energy Solar (ASX:NEW)
Perpetual (ASX:PPT)

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

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