Indexes mixed as CPI data for April is released

A widely followed measure of inflation rose in April, though the pace of the annual increase provided some hope that the cost of living will head lower later this year.

The consumer price index, which measures the cost of a broad group of goods and services, increased 0.4 per cent for the month, in line with the Dow Jones estimate. April consumer prices climbed 4.9 per cent from a year ago, which was less than the 5 per cent gain anticipated by economists polled by Dow Jones. Treasury yields tumbled following the report, further supporting a stock market which has been worried about higher rates snuffing out economic growth. Traders however remain remains divided on whether the Fed is done raising borrowing costs, with some market bulls predicting rate cuts later this year

Overnight the tech-heavy index added 1.04 per cent, closing at 12,306.44. The S&P 500 added 0.45 per cent to close at 4,137.64. Finally, the Dow Jones Industrial Average inched downward by 0.09 per cent, or 30.48 points, to end the day at 33,531.33.

Overall market gains were contained as cyclical stocks, which are most closely linked to the economy, traded lower. Shares like Nike and Caterpillar ended the session lower as some investors reasoned that inflation was slowing because a recession is imminent or has already arrived.

Airbnb and Twilio fell 10.9 per cent and 12.6 per cent, respectively, a day after reporting weak forecasts. Electric vehicle maker Rivian closed 1.8 per cent higher, a day after the company posted a narrower-than-expected loss.

On the EV front, Lithium companies Allkem Ltd and Livent Corp announced a $10.6 billion all-stock merger to become the world's third-largest producer of the metal for electric vehicle batteries, aiming to meet the growing demand from major automakers like Tesla, General Motors, and BMW.

Earnings season continues tomorrow with results from Disney and Robinhood.

Despite the latest sign of inflation increasing at a lower monthly clip in April, Wall Street remains seemingly cautious on sparking a full-blown rally.

Traders also monitored the latest updates on the US debt ceiling as worries mount that an agreement may not be reached before June 1, which is the earliest date the Treasury Department says the US could default. President Joe Biden held a key meeting with congressional leaders after the bell Tuesday, but comments from leadership on both sides of the aisle suggested that little progress was made. Biden and Congressional leaders will meet again on Friday.

Overnight, US sectors were mixed. Communication services was the leader, whilst the Energy sector continued its woes, and was the worst performer.

And in further international news, the US Northeast and Europe are bracing for an exceptionally hot summer, with temperatures expected to exceed historical averages, raising concerns for crops and energy consumption, as scientists predict a high likelihood of above-average temperatures in regions including the northeastern US, Spain, France, and Italy from June to August.

Futures

The SPI futures are pointing to a 0.2 per cent fall.

Currency

One Australian dollar at 7:10 AM is buying 67.77 US cents..

Commodities

Iron ore futures are pointing to a 2.2 per cent fall.

Gold lost 0.28 per cent. Silver fell 0.93 per cent. Copper dropped 1.55 per cent and oil lost 1.56 per cent.

Figures around the globe

Across the Atlantic, European markets closed lower. London’s FTSE lost 0.29 per cent, Frankfurt fell 0.37 per cent while Paris closed 0.49 per cent lower.

In Asian markets, Tokyo’s Nikkei lost 0.41 per cent, Hong Kong’s Hang Seng fell 0.53 per cent while China’s Shanghai Composite closed 1.15 per cent lower.

Yesterday, the Australian sharemarket closed 0.11 per cent lower at 7256.

Ex-dividends

Westpac Banking Corp (ASX:WBC) is paying 70 cents fully franked

Dividends payable

Myer Holdings (ASX:MYR)

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