Investors react to debt ceiling talks

The S&P 500 rose slightly to start the week Monday as traders assessed ongoing debt ceiling negotiations.

President Joe Biden is expected to host top congressional leaders on Tuesday for the debt ceiling talks which were postponed from Friday.

Treasury Secretary Janet Yellen told CNBC last week that failure to hatch an agreement on the debt ceiling would “produce financial chaos,” with the Treasury currently giving June 1 as the date when it could fail to meet its obligations. However, Yellen further hinted over the weekend that the US would avoid a default.

Overall, the broader index added 0.3 per cent to 4,136.28. Meanwhile, the Dow Jones Industrial Average snapped a five-day losing streak, gaining 47.98 points, or 0.14 per cent, to 33,348.60. The tech-heavy Nasdaq Composite outperformed, rising 0.65 per cent to 12,365.21.

On Monday, investors digested the May data for Empire State Manufacturing survey, which showed a collapse in manufacturing activity in New York. The survey fell about 43 points from April to a reading of -31.8, below the Dow Jones estimate of -5.

Elsewhere, corporate earnings season is drawing to a close, but some major retail reports this week will give investors further insight into the state of the consumer. Home Depot reports Tuesday. Target and Walmart are set to report Wednesday and Thursday, respectively.

In company news, pipeline operator Oneok has made headlines by announcing its agreement to acquire Magellan Midstream Partners in a deal worth a staggering $14 billion. This strategic move will result in the formation of one of the largest companies in the country dedicated to the transportation and storage of energy resources.

The acquisition price includes a premium of 22 per cent over Magellan's common units, totaling $8.8 billion in equity and $5.1 billion in cash. Additionally, Oneok will assume Magellan's net debt of $5 billion. The completion of the deal is expected in the third quarter, pending regulatory and investor approval.

Overnight, US sectors were fairly mixed. Materials was the best performer, whilst Utilities trailed behind, by far, closing 1.24 per cent lower.

And the impending arrival of El Niño is already impacting commodity markets worldwide, with its unpredictable nature potentially causing droughts, rainfall, and price fluctuations for crops like sugar and wheat, while traders and farmers prepare for the potential consequences, but the actual impact remains uncertain, for now.

Futures

The SPI futures are pointing to a flat start.

Currency

One Australian dollar at 7:10 AM is buying 67.03 US cents..

Commodities

Iron ore futures are pointing to a 1.60 per cent gain.

Gold added 0.14 per cent. Silver gained 0.57 per cent. Copper rose 0.60 per cent and oil gained 1.53 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE added 0.30 per cent, Frankfurt gained 0.02 per cent while Paris closed 0.05 per cent higher.

In Asian markets, Tokyo’s Nikkei added 0.81 per cent, Hong Kong’s Hang Seng gained 1.75 per cent while China’s Shanghai Composite closed 1.17 per cent higher.

Yesterday, the Australian sharemarket closed 0.14 per cent higher at 7267.

Ex-dividends

Autosports Group (ASX:ASG) is paying 9 cents fully franked
Dicker Data (ASX:DDR) is paying 10 cents fully franked
Plato Inc Max (ASX:PL8) is paying 0.55 cents fully franked
QV Equities (ASX:QVE) is paying 1.3 cents fully franked
Sandon Capital (ASX:SNC) is paying 2.75 cents fully franked

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

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