US equities finished lower in Thursday trading, with the S&P 500 bouncing off its lowest morning levels, but trading in a narrow range through the afternoon before fading into the close.
Yields spiked as traders digested the latest rate decision, putting pressure on equities. The yield on the 2-year Treasury note hit its highest level since July 2007 while the benchmark 10-year Treasury yield popped 8 basis points to 4.14 per cent.
Investor attention will also turn to October nonfarm payrolls, set to be released tonight. A good jobs number and a low unemployment rate, while good for the economy, could signal more work ahead for the Fed.
Another clue into inflation and the economy will also come from next week’s October consumer price index report.
The Dow Jones Industrial Average fell 0.46 per cent. The S&P 500 dropped 1.1 per cent and the Nasdaq Composite slid 1.7 per cent.
Elsewhere, corporate earnings season continued, with Qualcomm, Roku and Fortinet all falling on disappointing quarterly results and forward guidance. Kellogg’s shares fell nearly 9 per cent despite a strong quarter and lift to guidance.
Companies from a wide range of industries continued to highlight a pick-up in macro uncertainty, FX headwinds, with Europe and China the key areas of concern. Also another batch of high-profile corporate hiring freeze and layoff announcements overnight complicated the labour market narrative.
Chinese health authorities also pushed back against recent speculation it may be preparing for some kind of pivot on zero Covid, a policy which has been a major global growth headwind.
While Canada ordered three Chinese companies on Wednesday to divest their investments in Canadian critical minerals, citing national security.
For the week, all the major averages are on pace for losses, with the Dow down more than 2 per cent. The S&P 500 and Nasdaq have shed 3.9 per cent and 5.8 per cent, respectively, week to date.
Across the sectors energy was the standout despite a fall in the oil price. Strong results, higher dividends and share buybacks have led the sector to shine in 2022. The suggestion of a ‘windfall tax’ from the Biden government has already met heavy resistance from big oil & congress.
This year energy stocks occupy the top 10 gainers in the S&P 500 with the sector becoming a defensive safe haven for investors. Investors still want the lion’s share of this year’s record cash haul and a surge in Big Oil’s share prices is a strong argument for staying the course.
One Australian dollar at 7:25 AM is weaker compared to the US dollar yesterday, buying 62.94 US cents (Thu: 63.58 US cents), 56.42 Pence Sterling, 93.34 Yen and 64.55 Euro cents.
Iron ore futures are pointing to a 1.3 per cent gain.
Gold dropped $17.20 or over 1 per cent to US$1632.80 an ounce.
Silver fell $0.08 or 0.4 per cent to US$19.51 an ounce.
Copper lost $4.35 or 1.3 per cent to US$342.50 a pound.
Oil dropped $2.07 or 2.3 per cent to US$87.93 a barrel.
The SPI futures are pointing to a 0.4 per cent fall.
Figures around the globe
Across the Atlantic, European markets closed mixed. Paris fell 0.5 per cent, Frankfurt lost almost 1 per cent and London’s FTSE closed 0.6 per cent higher.
In Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng dropped 3.1 per cent and China’s Shanghai Composite closed 0.2 per cent lower.
Yesterday the Australian sharemarket lost 1.8 per cent to close at 6858.
Janus Henderson (ASX:JHG) is paying 59.8986 cents unfranked.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.