US markets trade lower as inflation concerns resurface

All three major indexes fell into the red after the minutes from the Federal Reserve’s May meeting raised concerns of persistent inflation, suggesting any rate cuts are likely to be pushed out further.

The Dow Jones fell 0.51 per cent, the index’s worst session in May. The S&P 500 finished down 0.27 per cent and the Nasdaq closed 0.18 per cent lower.

Minutes from the April 30 to May 1 policy meeting showed a readiness to raise rates if inflation didn't drop towards its 2 per cent target, reiterating the Fed's reluctance to lower rates and a willingness to tighten policy if necessary, despite the expectation that inflation would eventually reach 2 per cent over the medium term, possibly later than anticipated.

Nvidia reported their much anticipated Q1 earnings after market close. The numbers beat expectations for sales and earnings, and the company also provided stronger guidance for the current quarter. Nvidia also announced it will split its stock 10 to 1.

Nvidia reported net income for the quarter of $14.88 billion compared with $2.04 billion on the previous corresponding period. The Company said it expected sales of $28 billion in the current quarter versus current consensus of $26.61 billion according to LSEG. Nvidia shares were trading close to 4 per cent higher in extended trading.

In company news, Target shares closed 8 per cent lower after reporting softer than expected earnings numbers. The company cited weaker spending trends in discretionary categories.

Prices are on the decline for numerous items at Target and Walmart, reflecting a shift in consumer sentiment after three years of elevated inflation in the US. Target announced this week that it intends to reduce prices this summer for 5,000 products spanning from dairy to household essentials like paper towels, aiming to enhance its competitiveness. Similarly, Walmart informed analysts last week of its price reductions on a wide array of grocery items.

In recent mining news, Anglo American has turned down a $73.9 billion offer from BHP. Despite this, Anglo has given BHP an extra week to present an enhanced fourth bid. Anglo disclosed to the LSE that BHP's third bid, 9 per cent higher than the previous one, offered 0.886 BHP shares for each Anglo share. BHP CEO Mike Henry stated that this third offer was the final one.

Turning to US sectors, the worst performer was Energy which was down 1.83 per cent. The best performing sector was Healthcare which closed up 0.2 per cent.

In other news, despite consistent growth in gross domestic product over recent years, over half of Americans perceive the United States to be in an economic recession, with 56 per cent attributing responsibility to President Joe Biden for the perceived downturn, as per a new Guardian/Harris poll.

China's highly anticipated issuance of Rmb40bn ($5.5bn) special 30-year sovereign bonds faced two suspensions during its market debut on Wednesday. Exchanges warned against "abnormal fluctuations" and advised investors to consider risks rationally. Beijing aims to issue Rmb1tn in 20 to 50-year sovereign bonds this year to finance critical sectors and stimulate growth. The initial bonds debuted on the Shanghai and Shenzhen stock exchanges, departing from customary over-the-counter trading.

Futures

The SPI futures are pointing to a 0.9 per cent fall.

Currency

One Australian dollar at 7.35am was buying 66.2 US cents.

Commodities

Gold has lost 1.36 per cent. Silver has fallen 1.81 per cent. Copper has dropped 5.04 per cent. Oil has lost 1.39 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.55 per cent, Frankfurt lost 0.25 per cent, and Paris closed 0.61 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei fell 0.85 per cent, Hong Kong’s Hang Seng fell 0.13 per cent while China’s Shanghai Composite closed 0.02 per cent higher.

Yesterday, the Australian share market closed 0.05 per cent lower at 7,848.14.

Ex-dividends
Aristocrat Leisure (ASX:ALL) is paying 36 cents fully franked
Orica (ASX:ORI) is paying 19 cents unfranked

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

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