ASX Futures and Market Overview
ASX futures were down 13 points or 0.2% as of 6:00am on Friday, suggesting a poor start to the day. Shares in Walt Disney, Peloton Interactive and some regional banks weighed on stock indices Thursday, offsetting gains among most Big Tech firms after the US economy showed fresh signs of cooling.
Weekly jobless claims ticked higher Thursday, while a Labor Department measure of producer prices notched its slowest rate of growth since January 2021, providing new evidence that inflation is slowing and the Federal Reserve may pause interest rate hikes next month.
Still, major stock indices wavered for most of the day and finished mixed. The Dow Jones Industrial fell 0.7% while the S&P 500 edged down 0.2%. The technology-heavy Nasdaq Composite eked out a 0.2% gain.
In commodity markets, Brent crude oil lost 1.9% to US$74.99 a barrel while gold dipped 0.8% to US$2,014.46.
Australian government bonds were lower, with the 2 Year yield declining to 3.19% and the 10 Year yield falling to 3.39%. US Treasury notes also declined, with the 2 Year yield slipping to 3.91% and the 10 Year yield moving down to 3.39%.
The Australian dollar slumped to 66.98 US cents from its previous close of 67.78. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, moved up to 96.05.
Asia
Chinese shares ended Thursday mixed, extending a muted trading pattern. Investors have been weighing mixed signals, including a potential pause to the Fed's monetary tightening, worries over a global recession, and uncertainties over China's recovery momentum. The benchmark Shanghai Composite Index dropped 0.3% to settle at 3309.55. The Shenzhen Composite Index added 0.2% and the ChiNext Price Index was up 0.6%. Consumer-services sectors such as cinema operators and education companies led gains. But the strength was offset by losses among automakers, which pulled back from their rally on Wednesday.
Hong Kong stocks ended lower, extending a losing streak for a third day. The benchmark Hang Seng Index shed 0.1% to settle at 19743.79. Cross-sector losses dragged on, as a mixed bag of companies and industries weighed on the market. Aluminum-product maker China Hongqiao lost 3.4%, real estate developer Longfor shed 2.9% and glass manufacturer Xinyi Glass was down 2.5%.
Japan's Nikkei Stock Average closed little changed at 29126.72 amid cautiousness over the US debt-ceiling issue. Best performers on the benchmark index included Panasonic, which climbed 6.0% after projecting a 32% increase in FY net profit, and Fujifilm Holding, which added 5.9% after its Q4 net profit beat analysts' expectations. Thursday’s worst performers were Kyowa Kirin, which slid 13% after cutting its net profit forecast for 2023, and Sumitomo Metal Mining, which lost 12% after forecasting a 74% drop in fiscal-year net profit.
India's benchmark Sensex index ended flat at 61949.03, as gains in tech stocks helped offset losses in industrial shares. Tech Mahindra closed up 0.8% and Tata Steel was 0.4% lower. Among individual movers, Godrej Consumer Products rose 2.0% after its fourth-quarter net profit increased 24% on year. Adani Enterprises edged 3.0% higher following news that the board will consider equity issuance Saturday.
Europe
European stocks mostly dropped as US blue-chip shares fell amid mixed economic news. The pan-European Stoxx Europe 600 shed 0.1%, the German DAX backtracked 0.4%, and the French CAC 40 rose 0.3%. Miners lost ground as metal prices fell after Chinese producer prices slipped further into deflationary territory and the country's CPI hit its weakest level in two years.
Meanwhile, the US producer-price index (PPI) for April slowed further and core prices also eased, according to CMC Markets. "This has added to the prevailing narrative that pressure on prices is continuing to subside, though weekly jobless claims edged higher to 264,000," CMC analyst Michael Hewson wrote.
London’s FTSE 100 index closed down 0.1%, dragged by miners and oil-exposed stocks, after the Bank of England raised interest rates and reiterated that further increases are likely if inflation proves persistent. "We see this as a clear signal that at least one additional hike is on the way in June, with another to perhaps follow in August," Ebury strategist Matthew Ryan said in a note. The aerospace and defense company Rolls-Royce led the falls, down 6.7%, followed by Airtel Africa, which saw its shares drop 5.3% after reporting a worse-than-expected performance so far in 2023.
North America
Shares in Walt Disney, Peloton Interactive and some regional banks weighed on stock indices Thursday, offsetting gains among most Big Tech firms after the US economy showed fresh signs of cooling.
Weekly jobless claims ticked higher Thursday, while a Labor Department measure of producer prices notched its slowest rate of growth since January 2021, providing new evidence that inflation is slowing and the Federal Reserve may pause interest rate hikes next month.
Still, major stock indices wavered for most of the day and finished mixed. The Dow Jones Industrial fell 0.7% while the S&P 500 edged down 0.2%. The technology-heavy Nasdaq Composite eked out a 0.2% gain.
The quiet trading day continued a weekslong slow dance between markets and policy makers, as investors have parsed regulators' ability to contain banking sector stress while curbing price increases for housing, services and more.
Thursday's indicators of slowing inflation, which arrived a day after federal data showed consumer prices eased in April for the 10th straight month, would seem to provide a springboard for stocks to take off and sustain gains.
"But there's no rest for the weary until that debt ceiling gets resolved," said Karyn Cavanaugh, chief investment officer at Carolinas Wealth Management.
Amid ongoing talks in Washington on how the government can pay its bills and avoid a default, many investors have kept money on the sidelines of stock markets, instead earning income from Treasury bonds and money-market funds. Ms. Cavanaugh said the caution has held stock prices back despite corporate earnings in the first quarter largely exceeding Wall Street's expectations.
"I try to tell investors, 'Don't try to Washington-proof your portfolio,'" she said. "Let them play in their playpen."
On Thursday, regional banks continued showing signs of strain. Shares of PacWest Bancorp fell 23%, dragging down other regional banks, after the Los Angeles-based lender disclosed another round of deposit flight.
The KBW Nasdaq Regional Banking Index fell about 2.4% and shares of other regional banks including Zions, Comerica and Bank of Hawaii slid between 4.5% and 10%. Shares of JPMorgan Chase edged down 0.3%. Bank of America ticked 0.3% higher.
"Some fear still surrounds the banking system," said Thorne Perkin, president of multifamily office Papamarkou Wellner Perkin.
Other individual stocks also added downward pressure. Disney was the Dow's worst performer, according to FactSet, trading 8.7% lower after the company reported that its Disney+ streaming service lost US subscribers for the first time. Covid-era darling Peloton fell 8.9%, hitting a record low, after the company announced a recall affecting roughly 2.2 million bikes.
