ASX set to edge lower on back of Wall Street’s mixed day

By Damian Troise and Alex Veiga

Stocks wobbled in afternoon trading on Wall Street on Wednesday (US time), a day after the S&P 500 and the Dow Jones Industrial Average set their latest record highs.

In id-afternoon trade, the S&P 500 was up 0.2 per cent, the Dow Jones has slipped by 0.2 per cent and the Nasdaq rose 0.8 per cent. The Australian sharemarket is set to slip, with futures at 5.08am AEDT pointing to a fall of 8 points, or 0.1 per cent, at the open.

Tech giants have helped prop up Wall Street on Wednesday.
Tech giants have helped prop up Wall Street on Wednesday. Credit:Bloomberg

The S&P 500 had more losers than gainers, but several big technology and communications companies gained ground and helped counter losses elsewhere. Microsoft rose 4.9 per cent after reporting a 24 per cent surge in profits last quarter as its cloud computing business bounded ahead. Chipmaker Advanced Micro Devices rose 0.5 per cent after reporting encouraging earnings.

Google’s parent company, Alphabet, rose 6 per cent, within striking distance of an all-time high, as a continued rebound in digital ad spending bolstered surprisingly good financial results.

A mix of companies that rely on direct consumer spending also gained ground. Domino’s Pizza rose 2.4 per cent.

Bond yields fell significantly and weighed down banks, which rely on higher yields to charge more lucrative interest on loans. The yield on the 10-year Treasury fell to 1.53 per cent from 1.61 per cent late Tuesday. JPMorgan Chase fell 1.8 per cent.

US crude oil prices fell 2 per cent and pushed energy stocks lower. Exxon Mobil fell 2.2 per cent.

Fashion rental pioneer Rent the Runway rose 8.7 per cent in its stock market debut. The New York-based company’s offering priced at $US21 and was trading at $US22.33 a share.

Investors are busy reviewing the latest round of earnings from a variety of well-known companies. McDonalds rose 2.6 per cent after reporting solid financial results as an easing of business restrictions helped sales growth. Coca-Cola rose 1.7 per cent as sales grew along with the reopening of many venues and businesses over the summer.

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General Motors fell 3.7 per cent after reporting mixed financial results as the broader auto industry continues to face production problems because of a chip shortage. Rival Ford will report its results later Wednesday.

“After some strong days, markets are taking a breather,” said Kristina Hooper, chief global market strategist at Invesco. “They’re certainly digesting earnings.”

The steady flow of corporate report cards will continue Thursday with industrial bellwether Caterpillar and technology giant Apple. Amazon and Starbucks will also report their results on Thursday.

Outside of earnings, investors are also awaiting the latest update on US economic growth when the Commerce Department releases its report on third-quarter gross domestic product on Thursday.

Rising inflation remains a key concern for investors as they monitor earnings and the impact from supply chain problems and higher prices on businesses and consumers. Investors are also looking ahead to the Federal Reserve’s meeting next week to see how it moves forward with plans to trim bond purchases and its position on interest rates.

The central bank has maintained that inflation will prove to be “transitory” and tied to the economic recovery, though it has been more persistent than initially anticipated.

“Investors are coming to the realisation that transitory could be significantly longer,” Hooper said.

Markets in Asia closed lower as a Chinese newspaper warned that more real estate developers are likely to default on bonds. Investors are watching whether one of the biggest developers, Evergrande Group, can avoid a default on 2 trillion yuan ($420 billion) of debt.

European markets were mostly lower.

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Source: Thanks smh.com