US markets jump higher as inflation fears ease

The Dow Jones jumped as investors breathed a sigh of relief as key inflation readings released on Friday came in mostly as expected with no negative surprises.

The Dow closed 1.51 per cent higher posting its best day in 2024 with strong performances from constituents Salesforce and UnitedHealth rallying 7.5 per cent and 2.8 per cent respectively. The S&P 500 rose 0.80 per cent and the Nasdaq just tipped into the red as several big cap tech names saw profit taking.

In monthly terms, May saw the Dow add 2.3 per cent, the S&P 500 rose 4.8 per cent and the Nasdaq added a solid 6.88 per cent.

Economic data was the focus on Friday. The core personal consumption expenditures price index increased 0.2 per cent in April, in line with consensus expectations according to Dow Jones. Core PCE rose 2.8 per cent on an annualised basis, slightly above the 2.7 per cent expectations.

In company news, Dell Technologies fell more than 17 per cent after flagging its AI server backlog was smaller than anticipated. Cloud security stock Zscaler surged 8.5 per cent, while developer data platform MongoDB plunged almost 24 per cent. Apparel retailer Gap jumped more than 28 per cent.

Hot stock Nvidia's market value soared by $350 billion in volatile trading following its strong first-quarter earnings report, driven partly by activity in its options market. Despite a slight dip at the end of the week, its valuation reached $2.69 trillion, surpassing JPMorgan, Berkshire Hathaway, and Meta combined, with its peak value nearing half a trillion dollars in just a few days.

Despite no Fed speeches, a packed macro week looms ahead, featuring ISM manufacturing and services reports, JOLTS job openings, and the employment report.

Turning to US sectors, Energy was the best performer on Friday, closing over 2 per cent higher. This was followed by Real Estate and then Utilities. Tech was the worst performer.

On the European front, the ECB is widely expected to announce its first rate cut on Thursday, while traders are expecting the Bank of Canada to cut rates on Wednesday.

The ECB is fully priced by the bond market to cut its policy rate by a quarter of a percentage point to 3.75 per cent, while the Bank of Canada could reduce its rate by a similar amount to 4.75 per cent.

If these moves eventuate it places the ECB & BOC on divergent paths to the US Federal Reserve, which thanks to robust economic data has markets pushing out the first rate cut for the world’s largest economy to the end of the year.

Futures

The SPI futures are pointing to a 0.5 per cent gain.

Currency

One Australian dollar at 7.30am was buying 66.53 US cents.

Commodities

Gold lost 0.87 per cent. Silver dropped 3.47 per cent. Copper fell 1.21 per cent. Oil lost 1.18 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.54 per cent, Frankfurt rose 0.01 per cent, and Paris closed 0.18 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 1.14 per cent, Hong Kong’s Hang Seng fell 0.83 per cent while China’s Shanghai Composite closed 0.16 per cent lower.

On Friday, the Australian share market closed 0.96 per cent higher at 7,701.74.

Ex-dividends
Newmont Corporation (ASX:NEM) is paying 26.8446 cents unfranked

Dividends payable
Dicker Data Ltd (ASX:DDR)
Embark Early Education Ltd (ASX:EVO)

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

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