Nasdaq declines as indicators point to a weakening US economy

 

The Nasdaq Composite fell on Wednesday for a third-straight losing session as investors shifted away from growth stocks amid signs that the US economy is weakening.

The moves came as traders mulled over the latest ADP private payrolls report, which showed slowing job growth in March.

That followed Tuesday’s job openings report that suggested the Federal Reserve’s efforts to cool the labour market might finally be having an effect. In February, the number of available positions fell below 10 million for the first time in nearly two years.

Overall, The tech-heavy index sank 1.07 per cent, while the broad-based S&P 500 dipped 0.25 per cent. The Dow Jones Industrial Average added 80 points, or about 0.24 per cent, bolstered by an outperformance by health care stocks.

High-growth tech stocks were under pressure overnight, with Zscaler and Crowdstrike falling 8 per cent and 7 per cent, respectively. Chip stocks were also under pressure, with Advanced Micro Devices falling 3 per cent.

The defensive tilt of the market helped health care stocks outperform, boosting the Dow. Johnson & Johnson shares rose 3.5 per cent after the pharmaceutical company said Tuesday it would pay $8.9 billion over the next 25 years to settle claims that its talc products caused cancer.

Utilities stocks also outperformed, with the Utilities Select Sector SPDR Fund (NYSEARCA: XLU), which tracks the S&P 500 Utilities sector, closing by over 2 per cent.

US Treasury yields fell on Wednesday, but the potential for further rate hikes from central banks is contributing to market volatility. New Zealand’s central bank yesterday hiked rates by 50 basis points, noting that inflation was “too high and persistent.”

In commodity news, Lithium prices, which rose dramatically over the past two years and hurt consumers and auto makers with rising battery costs, are now reversing and dropping more than 30 per cent this year. This drop is due to the slowing demand for electric vehicles in China and cautious traders in volatile markets.

The lower prices for lithium and other battery metals will help provide some relief for auto makers and consumers after commodities helped lift battery prices about 7 per cent last year, according to data provider BloombergNEF. It typically takes months for moves in metal prices to ripple through to car costs because buyers negotiate long-term price contracts.

The Australian government anticipates cooling in the price of Iron Ore over the next five years, due to slower demand growth and increasing supply.

Note that the iron ore prices rebounded in recent months because of a partial recovery in China's steel production, as the country reopens following the end of its zero-covid policy.

The government notes that China expects a mild decline in total steel production over the next 5 years which should lead to a softer rate of growth in global iron ore demand.

Overall, overnight, S&P500 sectors were mostly lower. As previously mentioned, Utilities was the best performing sector, whilst Consumer Discretionary was the biggest laggard.
 
Futures

The SPI futures are pointing to a 0.1 per cent fall

Currency

One Australian dollar at 7:20 AM is buying 67.19 US cents..

Commodities

Gold lost 0.1 per cent. Silver fell 0.1 per cent. Copper added 0.3 per cent and oil fell 0.4 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. London’s FTSE added 0.4 per cent, Frankfurt fell 0.5 per cent while Paris closed 0.4 per cent lower.

In Asian markets, Tokyo’s Nikkei fell 1.7 per cent while Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.

Yesterday, the Australian sharemarket closed flat at 7237.

Ex-dividends

Brickworks (ASX:BKW) is paying 23 cents fully franked
Diverger (ASX:DVR) is paying 2 cents fully franked

Dividends payable

Adairs Ltd (ASX:ADH)
Atlas Arteria Ltd (ASX:ALX)
Cleanaway Waste Management Ltd (ASX:CWY)
Costa Group Holdings Ltd (ASX:CGC)
CTI Logistics Ltd (ASX:CLX)
Eureka Group Holdings Ltd (ASX:EGH)
Fletcher Building Ltd (ASX:FBU)
G8 Education Ltd (ASX:GEM)
Generation Development Group Ltd (ASX:GDG)
Genesis Energy Ltd (ASX:GNE)
HMC Capital Ltd (ASX:HMC)
Inghams Group Ltd (ASX:ING)
InvoCare Ltd (ASX:IVC)
IPD Group Ltd (ASX:IPG)
LGI Ltd (ASX:LGI)
Lycopodium Ltd (ASX:LYL)
MAAS Group Holdings Ltd (ASX:MGH)
Macmahon Holdings Ltd (ASX:MAH)
Mader Group Ltd (ASX:MAD)
McPherson's Ltd (ASX:MCP)
Monash IVF Group Ltd (ASX:MVF)
Motorcycle Holdings Ltd (ASX:MTO)
NRW Holdings Ltd (ASX:NWH)
Pacific Smiles Group Ltd (ASX:PSQ)
Perseus Mining Ltd (ASX:PRU)
PSC Insurance Group Ltd (ASX:PSI)
Reliance Worldwide Corp Ltd (ASX:RWC)
Service Stream Ltd (ASX:SSM)
Shriro Holdings Ltd (ASX:SHM)
South32 Ltd (ASX:S32)
Spark New Zealand Ltd (ASX:SPK)
Supply Network Ltd (ASX:SNL)
Ventia Services Group Ltd (ASX:VNT)
Vulcan Steel Ltd (ASX:VSL)
WiseTech Global Ltd (ASX:WTC)

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

Disclaimer

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