Markets flat as US earnings season shows resilience

Equity markets finished flat on Tuesday as traders digested a slew of earnings reports and their implications for the US economy.

The S&P edged up 0.09 per cent to end at 4,154.87, while the Dow Jones Industrial Average dipped 10.55 points, or 0.03 per cent, to close at 33,976.63. The Nasdaq Composite inched down 0.04 per cent to settle at 12,153.41.

Major benchmarks fluctuated as investors assessed the latest batch of key earnings reports. Despite a tough economic environment, Bank of America surpassed first-quarter expectations on the top and bottom lines as rates rose. Johnson & Johnson’s stock fell 2.8 per cent even after it beat estimates and raised its 2023 guidance.

Elsewhere, Goldman Sachs shares slumped 1.7 per cent after the banking giant reported lighter-than-expected revenue.

So far the US earnings season has proven resilient. All the major averages are up since the period kicked off.

Even after last month’s bank failures sent shockwaves across the financial sector, more than 86 per cent of traders now anticipate a 25 basis point increase next month. It marks a stark contrast to the calls for a halt in hiking in March.

In company news, Fox Corp. and its cable networks has agreed to pay $787.5 million to Dominion Voting Systems to settle a defamation lawsuit over false claims that Dominion’s machines swayed the outcome of the 2020 presidential election.

There is more M&A news in the biotech sector with Bellus Health to be acquired by Glasko Smith Kleine in a cash deal valued at ~$2B; a 100 per cent premium to Monday's close; GSK said acquisition forecast to be accretive to EPS from 2027.

The move to replenish its pipeline in respiratory therapies comes as GSK investors fret about whether there is enough in the medicine cabinet to keep the momentum going into the next decade with expected loss of patent protection of one of its key compounds.

Keep an eye on the US dollar as investors are betting on further weakness after its recent falls, as the fallout from last month’s banking crisis limits how far the Federal Reserve can raise interest rates and US investors hunt overseas for returns. After an 18-month bull run that took it to a 20-year high against a basket of currencies in September last year, the greenback has been in retreat as analysts have scaled back their expectations of US interest rate rises

Futures

The SPI futures are pointing to a 0.1 per cent gain.

Currency

One Australian dollar at 7:10 AM is buying 67.26 US cents..

Commodities

Iron ore futures are pointing to a 0.44 per cent gain.

Gold added 0.53 per cent. Silver gained 0.77 per cent. Copper rose 0.61 per cent and oil added 0.09 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE gained 0.38per cent, Frankfurt added 0.59 per cent while Paris closed 0.47 per cent higher.

In Asian markets, Tokyo’s Nikkei added 0.51 per cent, Hong Kong’s Hang Seng fell 0.63 per cent and China’s Shanghai Composite closed 0.23 per cent higher.

Yesterday, the Australian sharemarket closed 0.29 per cent lower at 7361.

Ex-dividends

Soul Pattinson (W.H) (ASX:SOL) is paying 36 cents fully franked
Tribeca Global (ASX:TGF) is paying 12.5 cents fully franked

Dividends payable

Garda Property Group (ASX:GDF)
Veem (ASX:VEE)

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

Disclaimer

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