Morning Report: Fed indicates further rate hikes ahead

The Dow Jones Industrial Average slid on Wednesday as Wall Street resumed a holiday-shortened week and digested the latest Federal Reserve meeting minutes for insights into the state of monetary policy.

The released report signalled that most officials indicated further interest rate hikes could lie ahead. The minutes gave Wall Street additional context to the central bank’s decision to skip a rate increase at the June meeting, but also signalled that they might raise rates twice more this year, beginning as soon as this month.

Data released Wednesday morning also showed factory orders were weaker than expected in May.

Later in the week, investors will watch for a batch of employment and wage data for insights into the strength of the labour market.

Overnight however, the 30-stock average lost 129.83 points, or 0.38 per cent, to close at 34,288.64. The S&P 500 fell 0.2 per cent to 4,446.82. The Nasdaq Composite slipped 0.18 per cent to end at 13,791.65. Both the Dow and S&P 500 ended three-day win streaks.

In company news, biotechnology player Moderna, saw a 1.5 per cent increase in its stock after announcing an agreement to manufacture mRNA medicines in China.

General Motors, experienced a 1.2 per cent climb in its stock as U.S. sales rose by 18.8 per cent in the second quarter.

Shares of Wolfspeed surged 14 per cent as the chip company revealed a significant milestone: a decade-long supply agreement worth $2 billion with Renesas Electronics, ensuring the provision of silicon carbide bare and epitaxial wafers.

However, shares of Coinbase, declined by 2 per cent after being downgraded by Piper Sandler, who noted that the recent surge in crypto prices did not translate into increased trading volume. Piper Sandler expects Coinbase to report its lowest trading volumes and monthly transacting users in over two years for the third quarter.

On the EV front, Chinese electric-vehicle company BYD Co. is entering the Latin American lithium market to secure a greater supply of the crucial EV battery component, with plans to introduce advanced technology in Chile, develop R&D patents, and collaborate with companies like SGM.

And Australia anticipates a notable decrease in lithium prices in 2024 and 2025 due to increased global output, despite doubling its own production, leading to a decline in Australia's share of global output from 50 per cent to 40 per cent by 2025, while Chile, China, Argentina, Canada, and Zimbabwe are expected to contribute to the global supply growth.

Overall, the US sectors closed mostly lower. Communications was the best performer, whilst Materials was the worst.

Futures

The SPI futures are pointing to a 0.51 per cent fall.

Currency

One Australian dollar at 7:15 AM was buying 66.56 US cents.

Commodities

Gold has lost 0.37 cent. Silver has gained 1.01 per cent. Copper has lost 0.91 per cent. Oil has gained 2.87 per cent.

Figures around the globe

European markets closed lower yesterday. London’s FTSE lost 1.03 per cent, Frankfurt lost 0.63 per cent, and Paris closed 0.8 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.25 per cent, Hong Kong’s Hang Seng lost 1.57 per cent and China’s Shanghai Composite closed 0.69 per cent lower.

The Australian sharemarket closed 0.36 per cent lower at 7253.17.

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

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