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Wall Street closed mixed on Wednesday as investors assessed favourable PPI data, and the federal reserve holding the cash rate at 5%-5.25% for another month, against the Fed signalling more rate hikes are expected in the coming months.
US producer purchasing price index data for May came in at a decline of 0.3%, beating expectations of a 0.1% drop and well below the unexpected rise of 0.2% in April, in another sign the Fed’s aggressive rate hike strategy is cooling economic growth and inflation. Goods prices fell 1.6%, the largest decrease since July 2022 mainly due to a 13.8% decline in gas prices and a 1.3% drop in food prices. The federal reserve’s FOMC meeting wrapped up overnight with the fed announcing a pause in rate hikes after 10 consecutive rises, but signalled more rate hikes by the end of the year in anticipation of inflation remaining sticky and above the target of 2%. The S&P500 rose 0.08%, and the Nasdaq added 0.39%, but the Dow Jones fell 0.68%.
Over in Europe, markets closed higher as investors looked ahead to the expected rate pause announcement out of the US which came after hours in European time. UK GDP data out yesterday also came in-line with expectations at a rise of 0.2% which was largely driven by growth in services. Germany’s DAX rose just under half a percent, the French CAC added 0.52% and, in the UK, the FTSE100 rose 0.1%.
Locally, the ASX rose 0.32% yesterday buoyed by a rally for materials stocks on the back of rising commodity prices driven by optimism that China may reveal a broader economic policy to stimulate economic recovery post pandemic in the very near future. On Tuesday, China’s central bank lowered a short-term lending rate for the first time in 10-months in a bid to boost its struggling-post pandemic recovery, which boosted hopes for a wider policy to be announced soon. Iron ore rallied over 2.2% yesterday, while copper added 2.93% on the news.
Biotech giant CSL fell over 7% on Wednesday after the company released an update guiding to lower profits for FY23 due to adverse currency movements. These adverse currency movements mean that CSL will now realise a negative impact to their fiscal 2023 forecast profit of between US$230 and US$250m. This is up from US$175m they provided in their guidance in only February of this year, which is significant, particularly given that forecast was only issued less than four months ago.
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