US markets react to the Fed raising rates by 25bp

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Stocks fell Wednesday after the Federal Reserve raised rates by 25 basis points, as was widely expected. Its tenth consecutive increase in just over a year.

Earlier bullish sentiment was dented somewhat after Fed Chair Jerome Powell ruled out cutting interest rates because he did not expect inflation to come down quickly enough.

He warned that the recent banking turmoil appeared to be “resulting in even tighter credit conditions for households and businesses”, which was likely to weigh on economic activity and the labour market.

The Dow Jones Industrial Average closed lower by 270.29 points, or 0.80 per cent, to end at 33,414.24. The S&P 500 dropped 0.70 per cent to close at 4,090.75. The Nasdaq Composite slid 0.46 per cent to close at 12,025.33. The indexes notched three-day losing streaks.

Overnight pressure remained on the banking sector – with the SPDR S&P Regional Banking ETF declining more than 1 per cent. The regional banking ETF fell more than 6 per cent during Tuesday’s trading session. Shares of PacWest shed nearly 2 per cent after losing about 28 per cent the prior day. Western Alliance shares were down 4.4 per cent.

In tech news – Qualcomm reported second-quarter earnings on Wednesday that were in line with analyst expectations but saw sales from handset chips, a core business for the company, decline 17 per cent on an annual basis.

Qualcomm CEO Cristiano Amon blamed a challenging environment in a statement, and the company said it had not seen evidence that smartphone sales are recovering in China.
Shares of ImmunoGen Inc more than doubled after its experimental ovarian cancer drug, Elahere, was found to have extended the lives of patients in a late-stage trial and received accelerated approval from the US FDA.

All eyes will be on Apple earnings on Thursday with the focus on capital management – The iPhone maker has been the buyback king over the past decade. From 2012 through the end of 2022, Apple spent over $572 billion on share repurchases, the most of any company, according to FactSet data.

In commodity news, the pursuit of copper has been intensified due to its vital role in green technology and the growing demand for electric vehicles and solar panels, however, supply growth is unlikely to meet demand, and the slow pace of China's property recovery and global economic headwinds may limit copper's potential in the short term.

Banks and insurers are increasingly implementing coal exclusion policies in their investments, with over 200 financial institutions globally having such policies, according to a report from the Institute for Energy Economics and Financial Analysis (IEEFA), indicating a growing trend towards climate action.

Overnight, all sectors closed lower. Energy rounded off a second day in a row as the worst performer, whilst Health, recorded the fewest losses.

Futures

The SPI futures are pointing to a 0.5 per cent fall

Currency

One Australian dollar at 7:10 AM is buying 66.69 US cents..

Commodities

Gold gained 1.16 per cent. Silver added 0.96 per cent. Copper lost 0.35 per cent and oil dropped 4.87 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE added 0.20 per cent, Frankfurt gained 0.56 per cent while Paris closed 0.28 per cent higher.

In Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng lost 1.18 per cent while China’s Shanghai Composite was closed.

Yesterday, the Australian sharemarket closed 0.96 per cent lower at 7197.

Ex-dividends

Jupiter Mines (ASX:JMS) is paying 1.2 cents unfranked
OM Holdings (ASX:OMH) is paying 1.5 cents unfranked
Waterco (ASX:WAT) is paying 5 cents fully franked

Dividends payable

Arena REIT (ASX:ARF)

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

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