Fed's annual stress test boosts Dow: ASX to open higher

Fed’s annual stress test boosts Dow: ASX to open higher

The Dow Jones Industrial Average rose on Thursday as big bank names gained after passing the Federal Reserve’s annual stress test, and a revised upward GDP print alleviated some recession fears on Wall Street.

A slate of positive economic data signalled economic resilience despite looming recession fears. That included a large upward revision in first-quarter GDP and a drop in weekly jobless claims to the lowest level since May.

The 30-stock index jumped 269.76 points, or 0.8 per cent, to finish at 34,122.42, lifted by major bank names. The S&P 500 added 0.45 per cent to end at 4,396.44, while the tech-heavy Nasdaq Composite closed flat at 13,591.33.

JPMorgan Chase and Goldman Sachs each rose more than 3 per cent, while Wells Fargo advanced 4.5 per cent. The action came a day after the central bank said all 23 institutions included in its annual stress test are well capitalised to weather a severe recession scenario. Other financial stocks that took a hit during this year’s banking crisis also gained, including Charles Schwab, Western Alliance and Zions Bancorporation.

Despite projected losses of $541 billion, the banks are still positioned to lend to households and businesses during such a scenario.

It has been a banner first half, and Friday marks its final trading day. The S&P 500 is up 14.5 per cent this year and on pace for its best monthly performance since January. The tech-heavy Nasdaq has climbed nearly 30 per cent and is heading toward its best first half since 1983 as rising optimism around artificial intelligence pushes up technology stocks. The blue-chip Dow is the relative underperformer, up just 2.9 per cent.

Despite the solid start to 2023, some on Wall Street are bracing for a potentially volatile second half.

Initial jobless claims for the week ending June 24th decreased by 25,000, reaching 239,000, surpassing the consensus estimate of 264,000. This figure marks the lowest level since May and the most significant week-to-week decline since October 2021.

In renewable energy news, the Biden administration has raised a record-breaking $105 million from solar power developers at a lease auction in Nevada, covering 23,675 acres of desert. It is the highest-yielding federal onshore renewable energy auction to date.

And Imerys and British Lithium have partnered for a $728 million project in Cornwall to develop granite deposits and produce 20,000 tonnes of lithium carbonate equivalent per year. Imerys will hold an 80 per cent stake, helping to reduce the UK and Europe's reliance on imported lithium.

Overall, US sectors closed mostly higher overnight. Financials was the best performer, whilst Communication Services was the worst.

And today's overseas data includes the release of China's June manufacturing and non-manufacturing PMIs at 11:30 am, Japan's May industrial production, Eurozone's May employment and June CPI at 7 pm, UK's final first-quarter GDP, and US's May personal income and spending at 10:30 pm, along with June Chicago PMI and University of Michigan consumer sentiment.

Futures

The SPI futures are pointing to a 0.17 per cent rise.

Currency

One Australian dollar at 7:30 AM was buying 66.18 US cents.

Commodities

Gold has lost 0.22 per cent. Silver has lost 1.24 per cent. Copper has lost 1.16 per cent. Oil has gained 0.43 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed yesterday. London’s FTSE fell 0.38 per cent, Frankfurt lost 0.01 per cent, while Paris closed 0.36 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei gained 0.12 per cent, Hong Kong’s Hang Seng lost 1.24 per cent and China’s Shanghai Composite closed 0.22 per cent lower.

Yesterday, the Australian sharemarket closed 0.02 per cent lower at 7,194.91.

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.
Copyright 2023 – Finance News Network