US stocks react to reports on global economy

Overnight, the S&P 500 ticked down 0.38 per cent to close at 4,267.52, and the Nasdaq Composite declined 1.29 per cent to end at 13,104.89. The Dow Jones Industrial Average, the outlier among the major averages, added 91.74 points, or 0.27 per cent, closing at 33,665.02. The broad market index fluctuated near its highest closing levels since August 2022.

At the same time, new reports on the health of the global economy are out. The World Bank has described the global economy as “precarious” and warned of sluggish growth, while the OECD offered muted optimism and foresaw a “long road to recovery".

And China’s exports have plunged, with worse-than-expected monthly trade data from Beijing yesterday suggesting that the country’s Covid-19-related recovery had stalled.

Despite this economic news, the so-called "fear index" — the VIX volatility index — touched its lowest level on Wednesday since a month before the 2020 lockdown. The index suggests investors aren’t overly concerned about an earnings slump, elevated interest rates, or an imminent global recession.

Overall, US sectors were mixed. Energy was the best-performing S&P 500 sector, rising about 2.6 per cent. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and First Trust Natural Gas ETF (FCG) added more than 3 per cent each. Communication Services was the worst-performing sector.

The SPI futures are pointing to a 0.18 per cent or 13 point fall.

Small caps

The Russell 2000 index of small-cap companies rose to its highest level since the US regional banking crisis in March, before slipping 0.3 per cent. The index has risen almost 8 per cent since the end of May, outperforming the S&P 500 and the Nasdaq Composite over the same period, which have both risen 2 per cent.

Small-cap stocks are rising primarily on the back of the recovery in US regional bank stocks, which have re-entered this week the investment-grade bond market for the first time since the start of the banking crisis.

Regional banks saw their share gains continue as the SPDR S&P Regional Banking ETF (KRE) rose more than 3 per cent. Shares of PacWest Bancorp jumped 14.4 per cent, while Zions Bancorporation added 4.5 per cent.

GameStop

Electronics retail company and well-known meme stock GameStop has seen its share price tumble by more than 20 per cent in extended trading after the company fired its CEO Matthew Furlong and appointed its board chairman Ryan Cohen as executive chairman effective immediately.

The company didn’t provide a reason for the firing but believe that Cohen will optimise their core business, unlocking long-term value creation for shareholders.

Currency

One Australian dollar at 7:20 AM was buying 66.55 US cents.

Commodities

Iron ore futures are pointing to a 2.33 per cent gain.

Gold has lost 1.2 per cent. Silver has lost 0.6 per cent. Copper has lost 0.3 and oil has gained 1.1 per cent.

Figures around the globe

Across the Atlantic, European markets closed lower. London’s FTSE fell 0.05 per cent, Frankfurt fell 0.2 per cent while Paris closed 0.09 per cent lower.

In Asian markets, Tokyo’s Nikkei gained 0.90 per cent, Hong Kong’s Hang Seng fell 0.05 per cent while China’s Shanghai Composite closed 1.15 per cent lower.

Yesterday, the Australian sharemarket closed 0.16 per cent or 11.65 points lower at 7117.99.

Ex-dividends

Terracom (ASX:TER) is paying 3 cents fully franked

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

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