Mixed economic signals weigh on US markets

US stocks slid as mixed economic data raised fears that stagflation may rear its ugly head, as growth numbers came in weaker than expected and price growth higher than expected.

The Dow Jones fell 0.98 per cent. The S&P 500 closed down 0.46 per cent and the Nasdaq finished 0.64 per cent lower.

Markets were surprised by a soft U.S. GDP print for the first quarter that showed a 1.6 per cent expansion versus expectations of 2.4 per cent. On the flip side the personal consumption expenditures price index increased 3.4 per cent versus the previous quarter’s 1.8 per cent rise. Both numbers taken together raised concerns that a stagflationary environment may be looming on the horizon.

Following the GDP print, traders are now expecting an easing of Federal Reserve monetary policy. Fed funds futures trading data has suggested there will be just one interest rate cut this year, according to the CME FedWatch Tool.

The GDP print has added further pressure to an already-tense market contending with concerns over a pullback in growth among technology earnings. As a result, Meta dipped 10.5 per cent after the social media giant issued light revenue guidance for the second quarter. International Business Machines also fell 8.3 per cent after missing consensus estimates for first-quarter revenue.

Alphabet and Microsoft reported results after the bell.

Alphabet surpassed analysts' expectations, showing a significant increase in revenue, growing at the fastest rate since early 2022. The company's announcement of its inaugural dividend payment, along with a $70 billion share buyback authorisation, contributed to the positive market response, propelling Alphabet's market cap past $2 trillion.

Microsoft also surpassed analyst expectations. The company’s revenue grew 17% year-over-year. The company's cloud segment, particularly Azure, showed accelerated growth, supported by its emphasis on artificial intelligence, highlighted by the launch of the Copilot AI add-on for Microsoft 365 subscriptions.

Turning to commodities, the prices of Cocoa have been on a tear this year – and could top $15,000 per ton as a poor harvests have led to shortages. Futures will continue to trade at increasingly higher levels, according to nine traders and analysts surveyed by Bloomberg at the World Cocoa Conference in Brussels.

Turning to US sectors, the performances were mixed overnight. Materials was the best performer, followed by Energy and Industrials. Communications got slammed overnight, closing lower by more than 4 per cent.

Currency

One Australian dollar at 7.20am was buying 65.19 US cents.

Commodities

Gold has gained 0.18 per cent. Silver has added 0.04 per cent. Copper has gained 1.16 per cent. Oil is up 0.92 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE added 0.48 per cent, Frankfurt lost 0.95 per cent, and Paris closed 0.93 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei dropped 2.16 per cent, Hong Kong’s Hang Seng gained 0.48 per cent and China’s Shanghai Composite closed 0.27 per cent higher.

On Wednesday, the Australian share market closed flat at 7,683.0

Dividends payable)
Australian Clinical Labs Ltd (ASX:ACL)
Boral Ltd (ASX:BLD)
Cedar Woods Properties Ltd (ASX:CWP)
Horizon Oil Ltd (ASX:HZN)

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

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