Strong retail sales & rising yields spook investors

Stocks erased early gains to finish well in the red after much stronger than expected retail sales cast further uncertainty around the likelihood and timing of rate cuts. Continued concerns around possible Israeli retaliation for Iran’s weekend attack also weighed heavily on markets. Middle East diminished the prospect of interest rate cuts.

The Dow Jones closed down 0.65 per cent after being more than 1 per cent higher earlier in the day. The S&P 500 fell 1.2 per cent and the Nasdaq tumbled 1.79 per cent.

In stock news, Salesforce dropped more than 7 per cent on news the company is in talks to acquire data management firm Informatica. Goldman Sachs shares rallied nearly 3 per cent after beating earnings expectations.

Yields popped after data showed retail sales had increased 0.7 per cent in March versus consensus expectations of a 0.3 per cent rise. Investors saw this as yet another indication consumption remains robust despite inflationary pressures, and cast further doubt on the timing and size of any Fed rate cuts. 10-year Treasury popped above 4.6 per cent touching its highest point since mid-November.

Also weighing on markets was Iran’s weekend attack on Israel. This was the first direct attack on Israel from Iranian territory. Concerns now turn to the potential for Israeli retaliation and the possibility of further escalation and destabilisation in the region.

In commodities related news, new restrictions on Russian metals trading have been imposed by both the US and UK, prohibiting the delivery of new supplies from Russia to the London Metal Exchange and the Chicago Mercantile Exchange. These restrictions specifically target copper, nickel, and aluminium produced on or after April 13. Additionally, the US is implementing a ban on Russian imports of all three metals. As a result, these measures are expected to impact prices on the LME and influence traders' willingness to handle Russian metal.

Aluminium posted its biggest intraday gain since at least 1987 and nickel and copper prices also rose.

Turning to US sectors, all closed lower for a second straight day. Tech was the worst performer of the sectors, closing almost 2 per cent lower. Health recorded the fewest losses.

Locally, attention will swing to the health of China’s economy at noon when the world’s second-biggest economy reveals retail sales, industrial production, GDP, and unemployment. Rio Tinto’s production report could also provide some insight into the health of China’s economy.

Futures

The SPI futures are pointing to a 0.8 per cent fall.

Currency

One Australian dollar at 7.25am was buying 64.43 US cents.

Commodities

Gold added 0.37 per cent. Silver gained 1.37 per cent. Copper jumped 2.83 per cent. Oil fell 0.29 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE fell 0.38 per cent, Frankfurt added 0.54 per cent, and Paris closed 0.43 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei fell 0.74 per cent, Hong Kong’s Hang Seng lost 0.73 per cent and China’s Shanghai Composite closed 1.26 per cent higher.

Yesterday, the Australian share market closed 0.46 per cent lower at 7,752.53.

Ex-dividends
WAM Global (ASX:WGB) is paying 6 cents fully franked

Dividends payable
HUB24 Ltd (ASX:HUB)
Chorus Ltd (ASX:CNU)
Garda Property Group (ASX:GDF)

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

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