Weakness across several large-cap financials weighed on market sentiment on Tuesday, resulting in US equities closing the trading session lower.
United States
By the conclusion of trade, the Dow Jones was 198.77 points down (-0.59%) at 33,402.38, while the S&P500 declined -0.58% to close at 4,100.60. The Nasdaq was also half a percent lower at 12,126.33. At the sector level from the S&P500, the industrials (-2.25%), energy (-1.72%), and materials (-1.47%) sectors were all lower, while the more defensive utility sector led the gainers, increasing by 0.52%. Charles Schwab (SCHW, -3.04%), Morgan Stanley (MS, -2.68%), and Well Fargo (WFC, -2.41%) were all notable decliners on the day. Job vacancies, as defined by the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) dropped to the lowest since May 2021, suggesting that the employment outlook in the US is beginning to deteriorate. This report precedes the jobs report due out on Friday, whereby the unemployment rate is expected to stay at 3.6%. The so far resilient jobs market in the US has been one of the main justifications for the Federal Reserve’s continued lifting of official interest rates, which as a reminder, now stands at 5%. The yields on US bonds were weaker overnight, with the 2-year yield declining 13 basis points to 3.825%, while the yield on the 10-year declining 7 basis points to 3.338%. The yield curve remains inverted, while short-term yields are above the long end of the curve, which has often been a solid predictor of a US recession.
Europe
Equity markets across Europe were mixed on Tuesday, with the German DAX gaining 0.14%, while the French Cac40 fell marginally, down -0.01%. The UK’s FTSE100 declined 0.50%, ending the trading session at 7,634.52.
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Australia
Looking at the local share market and the ASX200 Index gained 13 points (+0.18%) on Tuesday, closing the day at 7,236.02. This move follows a decent rally over the past week or so, with the Index finding support at the 7000 level once again. Gold stocks continue to attract buyers, with many stocks rallying 3-4% on Tuesday, including Northern Star Resources (NST), Evolution Mining (EVN), West African Resources (WAF), Gold Road Resources (GOR), and Ramelius Resources (RMS). ASX SPI200 futures are down slightly in overnight trading, slipping 13 points (-0.18%) at 7,251. In some positive news for homeowners, the RBA left the Cash Rate unchanged on Tuesday at 3.60%.
Commodities
To commodity markets, oil prices remain well supported, with WTI Crude closing up US$0.15 (+0.19%) at US$80.86 a barrel, while spot gold closed comfortably above the US$2,000 level at US$2,020.43 an oz. Base metals prices were weaker, with nickel, aluminum, and copper down -1.95%, -0.64%, and -0.85% respectively. The Aussie dollar was slightly weaker, dipping to 0.6756.
Economic Data
Wednesday 5th March
AUST: RBA Gov Lowe Speech, 12:30 pm
CAN: Balance of Trade (FEB), 10:30 pm
Thursday 6th March
US: ISM non-Manufacturing PMI (MAR), 12:00 am
AUST: Balance of Trade (FEB), 11:30 am
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
