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US markets mixed as Fed opts to hold rates steady

PUBLISHED

2024-05-02

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US equities traded mixed for most of the session after Federal Reserve Chair Jerome Powell commented that the next move is unlikely to be a hike, easing investor concerns that the Fed was losing control of sticky inflation.

It was a volatile day for the major averages, with the 30-stock Dow rallying more than 530 points at its session high, spurred by Powell’s comments. At one point, the S&P 500 was up 1.2 per cent, while the Nasdaq climbed more than 1.7 per cent.

Overall, the Dow closed 0.23 per cent higher, the S&P 500 lost 0.34 per cent and the Nasdaq slid 0.33 per cent.

The central bank opted to hold rates steady, citing a “lack of further progress” in bringing inflation back down toward its 2 per cent goal. However, Powell ruled out the likelihood of a hike in a press conference following the decision.

Investors also reacted positively to the Fed saying it would tap the brakes on one way it tightens conditions for financial markets. Starting in June, the central bank said it will slow the pace at which it allows maturing bond proceeds to roll off its balance sheet without reinvesting them. This is a process known as quantitative tightening.

In company news, AI related stocks were softer following disappointing reports from some top AI contenders. Advanced Micro Devices fell 8.9 per cent after issuing an in-line current-quarter revenue forecast, while Super Micro Computer slid 14 per cent on light revenue.

Oil extended declines as US crude inventories swelled to the highest since June and traders waited for the Federal Reserve’s policy decision.

West Texas Intermediate slumped for the third straight session to trade below $US81 a barrel, reaching the lowest intraday price since March 14, while Brent futures fell below $US85.

The US Senate unanimously approved legislation banning Russian uranium imports, aimed at pressuring Russia amid its conflict with Ukraine; President Joe Biden is anticipated to sign it soon. Additionally, the bill unlocks $2.7B to develop the domestic uranium processing industry, intending to reduce dependence on Russian imports, which constituted about 12% of US nuclear power plants' uranium supply in 2022.

Turning to US sectors, the best performer was Utilities which finished the day 1.14 per cent higher. The worst performing sector was Energy which closed down 1.6 per cent.
 
Futures

The SPI futures are pointing to a 0.1 per cent fall.

Currency

One Australian dollar at 7.30am was buying 65.19 US cents.

Commodities

Gold has dropped 2.32 per cent. Silver has lost 3.64 per cent. Copper has fallen 2.39 per cent. Oil is down 0.85 per cent.

Figures around the globe

London’s FTSE fell 0.28 per cent while Frankfurt and Paris were closed.

Turning to Asian markets, Tokyo’s Nikkei fell 0.34 per cent while Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.

The Australian share market closed 1.23 per cent lower at 7,569.95.

Ex-dividends
Acorn Capital Investment Fund (ASX:ACQ) is paying 2.75 cents fully franked
Bank of Queensland (ASX:BOQ) is paying 17 cents fully franked
WAM Strategic Value (ASX:WAR) is paying 2.25 cents fully franked
Waterco Limited (ASX:WAT) is paying 7 cents fully franked

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

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.

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