Source : the age
Oil prices rose following the latest flare-up in fighting to threaten the US-Iran ceasefire, and US stocks retreated from their records.
The S&P 500 fell 0.7 per cent from its all-time high for its first drop in 10 days. The Dow Jones Industrial Average dropped 620 points, or 1.2 per cent, and the Nasdaq composite sank 0.9 per cent.
The Australian sharemarket is set to decline, with futures at 4.57am AEST pointing to a fall of 57 points, or 0.6 per cent, at the open. The ASX added 0.7 per cent on Wednesday, after a report showed the nation’s economy grew less than expected last quarter, boosting optimism for an interest rate reprieve from the Reserve Bank. RBA governor Michele Bullock and assistant governors Christopher Kent and Sarah Hunter will appear before the Senate Economics Legislation Committee this afternoon as part of budget estimates.
The Australian dollar was trading lower at US71.30¢.
Weighing on Wall Street was a climb of 1.9 per cent for the price of a barrel of Brent crude oil, the international standard, which brought it back to $US97.81. It rose after both the United States and Iran said they launched retaliations for earlier attacks or attempted ones.
Palo Alto Networks helped drag the market lower, and it fell 5.6 per cent even though it reported profit for the latest quarter that topped analysts’ expectations. Investors may have been looking for even more after its stock came into the day with a surge of 61.3 per cent for the year so far, more than quintuple the S&P 500’s already big 11.2 per cent rise.
Meanwhile, SpaceX publicly set a $US135 price for shares in its initial public offering, upending the longstanding Wall Street price-discovery apparatus and underscoring Elon Musk’s determination to raise record sums his way.
The company’s decision to publish a price a week ahead of its landmark offering has few if any precedents among major US IPOs, and reflects Musk’s standing in the financial world as an adventurer with a golden touch. SpaceX’s amended IPO filing confirms a Reuters report on the $US135 price from earlier this week. The company is aiming to raise $US75 billion, the most ever for an IPO, in a deal that would value it at $US1.75 trillion, immediately placing it among the top 10 most valuable US-listed firms. That would put Elon Musk’s net worth at $US988 billion, according to calculations by the Bloomberg Billionaires Index, putting him in touching distance of becoming the world’s first trillionaire.
The company will kick off an investor roadshow on Thursday, with pricing expected on June 11; trading in shares will begin on the Nasdaq the next day.
Stocks also felt pressure from higher yields in the bond market, which climbed with the price of oil. The yield on the 10-year Treasury rose to 4.49 per cent from 4.46 per cent late Tuesday and from just 3.97 per cent before the war began.
High yields worldwide are threatening to slow economies and undercut prices for stocks and all kinds of other investments. They have already forced the average long-term US mortgage rate to its most expensive level in nine months, and they could curtail companies’ borrowing to build the artificial-intelligence data centres that have supported the US economy’s growth recently.
More expensive loans can hurt smaller companies in particular because many need to borrow to grow. The Russell 2000 index of the smallest US stocks fell 1.3 per cent, more than the rest of the market.
Reports released on the US economy came in mixed. One from the Institute for Supply Management said growth accelerated more last month for US construction, agricultural and other services businesses than economists expected.
That’s an encouraging signal, but the survey also showed businesses are feeling the pinch of higher prices caused by tariffs and more expensive oil. “This is the definition of inflationary pressure starting to affect us,” one company in the accommodation and food services industry said in the survey.
Still, stocks remain near their records, even with all the pressure on the global economy created by higher inflation.
Oil prices remain below their peaks from earlier in the war with Iran, and hope seems to be remaining on Wall Street that the United States and Iran will ultimately agree to reopen the Strait of Hormuz to oil tankers. That would improve the global flow of crude and hopefully lower its price.
Such hopes, along with strong profit reports from US companies, helped launch the S&P 500 on its nine-day winning streak that ended Wednesday, one day shy of its longest in three decades.
Medtronic climbed 5.7 per cent after reporting a stronger profit for the latest quarter than analysts expected. It also increased its dividend payout going to investors.
GameStop rose 6 per cent after the video-game retailer said its revenue in the latest quarter grew 14 per cent from a year earlier. It also announced a program to send up to $2 billion to its investors by buying back its own stock.
Macy’s added 0.6 per cent after swinging between gains and losses through the day. The retailer reported profit for the latest quarter that blew past analysts’ forecasts, while saying an overhaul of its merchandise and better customer service is resonating with customers.
All told, the S&P 500 fell 56.10 points to 7,553.68. The Dow Jones Industrial Average dropped 620.72 to 50,687.07, and the Nasdaq composite sank 239.93 to 26,853.98.
In stock markets abroad, European indexes fell following a mixed finish in Asia.
Hong Kong’s Hang Seng dropped 1.6 per cent, but Japan’s Nikkei 225 jumped 2.5 per cent to another record.
Excitement around the boom created by AI technology has been a huge engine for stock markets worldwide. On Wall Street, Marvell Technology rose another 3.7 per cent following its best day on record, a surge of 32.5 per cent, after Nvidia CEO Jensen Huang suggested at a conference in Taiwan that Marvell could be “the next trillion-dollar company.”
The last company to enter the expanding club of behemoths was Micron Technology, which is likewise riding the AI wave.
AP
AP, with Reuters, Bloomberg
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