Little progress in debt ceiling talks causes US stocks to fall

Stocks fell Tuesday as ongoing debt ceiling discussions appeared to yield little progress.

Some traders interpreted the lack of any major updates on negotiations as a sign that lawmakers, perhaps, are struggling to progress as hoped.

Investors have been closely eyeing debt-limit negotiations in Washington, hoping for more certainty as the so-called June 1 X-date expected by Treasury Secretary Janet Yellen fast approaches.

Some House Republicans on Tuesday questioned the accuracy of this projected default date.

On Monday, Kevin McCarthy and President Joe Biden met at the White House, in a discussion that the House speaker described as “productive” and “professional,” although the hour long talk concluded without a resolution.

Overall, the S&P 500 dropped 1.12 per cent to settle at 4,145.58, while the Nasdaq Composite pulled back 1.26 per cent to close at 12,560.25. The Dow Jones Industrial Average lost 231.07 points, or 0.69 per cent, to finish at 33,055.51.

In company news, Apple moved 1.5 per cent lower after announcing a multibillion-dollar chip production deal with Broadcom. The chip stock gained 1.2 per cent. Yelp popped 5.7 per cent as an activist investor called for the company to explore a sale.

Japanese bank Mizuho is set to enter the Australian market through its acquisition of Greenhill & Co, leveraging the latter's local presence and expertise, although retaining and incentivising the key staff members will be crucial for the success of the deal amid a competitive and challenging landscape.

The biggest bank in the US, JPMorgan Chase, is investing over $200 million to purchase carbon removal credits from various companies in an effort to fight climate change and neutralise its environmental footprint, positioning itself as a leader in the emerging clean-energy industry.

In commodity news, the US Energy Department told lithium battery company Microvast Holdings it will not award it a $200 million grant, a source familiar with the matter said on Monday, after lawmakers cited concerns over its alleged links to China's government.

The department had been in talks with Microvast over the grant to help build a plant in Tennessee. The grant stemmed from the $1 trillion 2021 bipartisan infrastructure law. Microvast shares close 36 per cent lower on the day.

The price of copper has reached its largest discount compared to its futures equivalent in nearly twenty years, signalling a potential decline in global demand due to a slowdown in China's economic recovery. This price gap represents the widest margin since 2006, as reported by the London Metal Exchange.

All US sectors except for Energy closed lower. Materials was the biggest laggard.

Futures

The SPI futures are pointing to a 0.5 per cent fall

Currency

One Australian dollar at 7:10 AM is buying 66.11 US cents.

Commodities

Iron ore futures are pointing to a 1.4 per cent fall.

Gold lost 0.02 per cent. Silver fell 1.18 per cent. Copper dropped 1.23 per cent and oil gained 2.36 per cent.

Figures around the globe

Across the Atlantic, European markets closed lower. London’s FTSE fell 0.10 per cent, Frankfurt lost 0.44 per cent while Paris closed 1.33 per cent lower.

In Asian markets, Tokyo’s Nikkei lost 0.42 per cent, Hong Kong’s Hang Seng fell 1.25 per cent while China’s Shanghai Composite closed 1.52 per cent lower.

Yesterday, the Australian sharemarket closed 0.05 per cent lower at 7260.

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

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.
Copyright 2023 – Finance News Network