Markets flat as debt ceiling looms

The S&P 500 closed near the flat line on Monday as investors looked ahead to pivotal inflation readings.

April’s CPI report is due Wednesday, followed by the producer price index on Thursday.

There are just a few precious weeks remaining for Congress and the White House to reach a debt-limit accord and avoid “an economic and financial catastrophe.” That makes tomorrow’s meeting between President Biden and Speaker Kevin McCarthy all the more pivotal as a deadline looms for the US to potentially run out of cash.

However the differences between Congress and the Biden administration are vast. Republicans want to reduce the country’s $31.4 trillion debt through spending cuts, while the White House views tax increases on companies and wealthy Americans as the best way to reduce the burden.

Overnight the broad market index was little changed with a small gain of 0.05 per cent, ending the session at 4,138.12. The Nasdaq Composite added 0.18 per cent, closing at 12,256.92. The 30-stock Dow Jones Industrial Average slipped 55.69 points, or 0.17 per cent, to end at 33,618.69.

Meanwhile, select bank shares ticked higher to begin the week. Shares of PacWest gained 3.6 per cent. Late Friday evening, the bank announced that it would cut its dividend to just 1 cent per share from 25 cents per share in the prior quarter. Western Alliance shares ended the day up about 0.6 per cent. Big banks Wells Fargo and JPMorgan Chase also rose.

Meanwhile, Berkshire Hathaway Class A shares rose 1 per cent. On Saturday, Warren Buffett’s conglomerate reported its first-quarter results. The company reported a huge jump in first-quarter profits thanks to investment gains, but more muted results across its operating businesses.

Echoing dour comments by Munger, Buffett warned of a continued economic downturn, thanks to higher interest rates and lower consumer spending.

Overnight, sectors were mixed. Communication Services was the biggest winner, by far, whilst Real Estate was the biggest laggard.

Futures

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

Currency

One Australian dollar at 7:10 AM is buying 67.81 US cents..

Commodities

Iron ore futures are pointing to a 2.76 per cent gain.

Gold added 0.41 per cent. Silver lost 0.37 per cent. Copper gained 1.20 per cent and oil jumped 2.55 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. London’s FTSE was closed, Frankfurt shed 0.05 per cent while Paris closed 0.11 per cent higher.

In Asian markets, Tokyo’s Nikkei lost 0.71 per cent, Hong Kong’s Hang Seng added 1.24 per cent while China’s Shanghai Composite closed 1.81 per cent higher

Yesterday, the Australian sharemarket closed 0.78 per cent higher at 7276.

Ex-dividends

United Overseas Aust (ASX:UOS) is paying 2 cents unfranked

Dividends payable

Duratec (ASX:DUR)

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

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