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Stocks declined on Monday with the Nasdaq Composite index falling to the lowest level in two years as tech shares, which are sensitive to interest rate hikes, continue to be the hardest hit in this bear market. The declines came as JPMorgan CEO Jamie Dimon warned that the US would likely fall into a recession in 2023, and that it may not be just a mild economic contraction as some economists have projected. New monthly Producer Price Index data comes Wednesday and Consumer Price Index data comes Thursday.
The Dow Jones Industrial Average shed 0.3 per cent, bolstered by gains in Merck and McDonald’s. The S&P 500 also fell, dragged down by semi stocks and dips in major tech names like Microsoft. The benchmark lost 0.8 per cent. The Nasdaq Composite fell more than 1 per cent to touch its lowest levels since September 2020, weighed down by a slump in semiconductor stocks. The Nasdaq’s losses for the year are now greater than 32 per cent after Monday’s decline.
The Fixed Income markets were closed to observe the Columbus Day public holiday.
Across the sectors, shares of semiconductor companies fell Monday, with the industry selling off globally after fresh US curbs on China’s access to American technology added to a disappointing start to the earnings season, stoking concern that the industry’s downturn is far from over. Tech shares have also been hit the hardest in this sell-off as rising rates expose their relatively high valuations and raise their cost of capital.
Shares of electric vehicle maker Rivian (NASDAQ:RIVN) fell 7 per cent after the company voluntarily recalled nearly all of its vehicles. The recall involves Rivian’s electric pickups, vans, and SUVs. The Amazon-backed EV maker sent a message to its customers to inform them of the recall, according to a statement by Rivian.
Investors are also cautious ahead of key earnings and inflation reports this week with some growing fears that 2023 estimates will need to come down further as companies face risks from factors including weakening consumer demand, higher wage costs, still-sticky inflation, and FX headwinds.
Four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – report Friday. PepsiCo, Delta and Domino’s are also among companies reporting next week.
South Carolina state’s treasurer has redeemed money from BlackRock over its E.S.G. investment principles. The state’s treasurer plans to withdraw $200 million from the firm by year end, joining states like Louisiana and Utah. Red states have committed to pulling investments to punish the firm over its commitment to environmental investing policies.
Currencies
One Australian dollar has weakened by almost 1 cent compared to the US dollar yesterday, buying 62.97 US cents
Commodities
Iron ore futures are pointing to a 0.1 per cent gain.
Gold lost $34.20 or 2 per cent to US$1675 an ounce.
Silver fell $0.63 or 3.1 per cent to US$19.62 an ounce.
Copper gained $5.25 or 1.6 per cent to US$343.90 a pound.
Oil lost $1.90 or 2.1 per cent to US$90.74 a barrel.
Futures
The SPI futures are pointing to a 0.2 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed mostly lower. Paris fell 0.5 per cent, Frankfurt closed flat while London’s FTSE closed 0.5 per cent lower.
In Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng dropped 3 per cent while China’s Shanghai Composite lost 1.7 per cent.
Yesterday, the Australian sharemarket lost 1.4 per cent to close at 6668.
Ex-dividends
Reece (ASX:REH) is paying 15 cents fully franked
Turners Automotive Group (ASX:TRA) is paying 4.3618 cents 85 per cent franked
Dividends payable
Chorus Ltd (ASX:CNU)
Cronos Australia Ltd (ASX:CAU)
E&P Financial Group Ltd (ASX:EP1)
Imdex Ltd (ASX:IMD)
Pacific Current Group Ltd (ASX:PAC)
Ramelius Resources Ltd (ASX:RMS)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
