Markets close mixed following Fed rate commentary

US markets finished close to the flatline following Federal Reserve Chair Jerome Powell comments that interest rates may need to stay elevated.

The S&P 500 lost 0.21 per cent, the Nasdaq closed down 0.12 per cent and the Dow Jones rose 0.17 per cent.

Fed Chair Powell commented that “More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2 per cent inflation goal,” Powell also said that rates will remain at current levels as long as necessary.

However, the Dow was buoyed by UnitedHealth’s rally of more than 5 per cent on the back of better-than-expected revenue for the first quarter. That outweighed fellow Dow member Johnson & Johnson, which fell around 2 per cent on the heels of mixed quarterly results.

Morgan Stanley advanced 2.5 per cent after beating analysts’ consensus forecasts on both lines. Bank of America tumbled 3.5 per cent after announcing a fall in profit and revenue.

America’s largest companies have given Wall Street reason for optimism in the early innings of the new corporate earnings season. Of the less than 10 per cent of S&P 500-listed firms that have reported financials, nearly 4 of every 5 have exceeded Wall Street consensus estimates, according to FactSet.

But higher rates weighed on investors. The 2-year U.S. Treasury yield briefly spiked above 5 per cent on Tuesday following Powell’s remarks.

Traders also monitored tensions in the Middle East after Iran’s launch of missiles and drones at Israel on Saturday. The CBOE Volatility Index, commonly referred to as the fear gauge, hovered around 19 after popping in the previous session.

Though the Dow ended its losing streak, the down period has zapped much of its year-to-date gain. That is a major reversal considering it approached 40,000 just weeks prior.

Turning to US sectors, Tech, Consumer Staples and Health, were the only sectors that closed in the green overnight. Real Estate was the worst performer.

Futures

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

Currency

One Australian dollar at 7.35am was buying 64.01 US cents.

Commodities

Gold added 1.04 per cent. Silver fell 1.19 per cent. Copper lost 1.72 per cent. Oil shed 0.06 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 1.82 per cent, Frankfurt lost 1.44 per cent, and Paris closed 1.40 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei fell 1.94 per cent, Hong Kong’s Hang Seng dropped 2.12 per cent and China’s Shanghai Composite closed 1.65 per cent lower.

Yesterday, the Australian share market closed 1.81 per cent lower at 7,612.49.

Ex-dividends
Boral Limited (ASX:BLD) is paying 26 cents fully franked
Soul Pattinson (W.H) (ASX:SOL) is paying 40 cents fully franked

Dividends payable
Flight Centre Travel Group Ltd (ASX:FLT)
Kelsian Group Ltd (ASX:KLS)
Sigma Healthcare Ltd (ASX:SIG)
Veem Ltd (ASX:VEE)

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

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