Major indexes lower as investors await key inflation reports

Stocks closed lower Tuesday as investors readied for key inflation reports due later in the week and progress on the US debt limit.

Traders are looking ahead to April’s consumer price index report slated for Wednesday and the producer price index on Thursday for the newest data on the path of inflation. Economists polled by Dow Jones expect inflation to have increased 0.4 per cent month-over-month in April, and 5 per cent year-over-year.

President Joe Biden is hosting a meeting with House Speaker Kevin McCarthy Tuesday afternoon. The two sides are coming into the negotiations far apart: Biden says the ceiling should be raised with no conditions, while Republicans have vowed only to raise it in exchange for steep spending cuts. The clock is ticking as the US anticipates running out of money to pay all its bills as of June, but today’s meeting is not expected to produce a final result.

The S&P 500 pulled back by 0.46 per cent to 4,119.17, and the Nasdaq Composite dropped 0.6 per cent to 12,179.55. The Dow Jones Industrial Average declined 0.17 per cent to 33,561.81.

PacWest shares closed up 2.4 per cent, after a volatile session. The SPDR S&P Regional Banking ETF ended the day down less than 1 per cent, amid ongoing concerns in the banking sector.

Lucid, PayPal and Skyworks closed down after their quarterly reports were released. Meanwhile, Palantir jumped 23 per cent on a strong earnings report and upbeat guidance.

Shares of Airbnb fell 10 per cent in extended trading Tuesday after the company released first-quarter earnings that beat analyst estimates but offered slightly weaker-than-expected guidance and a cautious outlook for Q2

Glencore plans to construct Europe's largest battery recycling plant in Italy by 2027, aiming to repurpose its zinc and lead smelter to produce metals essential for electric vehicle batteries, as the company capitalises on the electric car transition; meanwhile, Chinese iron ore prices have dropped to their lowest levels in five months due to weakening demand, raising concerns about the durability of China's economic recovery.

China's copper imports declined by 12.5 per cent in April compared to the prior year, largely due to weak demand and a jump in domestic copper production.

The world’s largest oil company, Saudi Aramco, reported $31.88 billion in profits this quarter – more than Google, Meta, Nvidia, Amazon and Tesla combined. The figures do however represent a 19 per cent decline YoY, due to the falling oil prices.

Treasurer Jim Chalmers announced the Federal Budget for 2023. The Albanase government expects to generate a further $22bn in revenue from iron ore and coal prices. Soaring iron ore and coal exports, as well as higher than expected prices last year helped deliver a budget surplus this year. Whilst trade exports are expected to fall, the treasury outlined that iron ore, met coal and thermal coal are expected to increase.

Overnight, US sectors were mixed. Industrials was the best performer, whilst Materials was the worst.

Futures

The SPI futures are pointing to a 0.3 per cent fall.

Currency

One Australian dollar at 7:10 AM is buying 67.62 US cents..

Commodities

Iron ore futures are pointing to a 0.13 per cent gain.

Gold added 0.48 per cent. Silver rose 0.25 per cent. Copper lost 0.71 per cent and oil gained 0.75 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. London’s FTSE lost 0.18 per cent, Frankfurt added 0.02 per cent while Paris closed 0.59 per cent lower.

In Asian markets, Tokyo’s Nikkei gained 1.01 per cent, Hong Kong’s Hang Seng fell 2.12 per cent while China’s Shanghai Composite closed 1.10 per cent lower.

Yesterday, the Australian sharemarket closed 0.17 per cent lower at 7264.

Ex-dividends

Bank of Queensland (ASX:BOQ) is paying 20 cents fully franked
National Aust. Bank (ASX:NAB) is paying 83 cents fully franked
ResMed Inc (ASX:RMD) is paying 4.6477 cents unfranked

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