Wall Street mixed as consumer spending slows


May 02, 2017 09:56:52

Stocks on Wall Street were mixed as good profit results were offset by weaker United States economic data.

Markets at 8:00am (AEST):

  • ASX SPI 200 futures +0.15pc to 5,945
  • AUD: 75.30 US cents, 58.40 British pence, 84.28 Japanese yen, 69.02 eurocents, $NZ1.0896
  • US: S&P 500 +0.17pc to 2,388, Dow Jones -0.13pc to 20,914, Nasdaq +0.73 to 6,092
  • Commodities: Gold -0.01pc to $US1,256.16/ounce, Brent crude -1.13pc to $US51.46, Iron Ore -0.00 $68.80.

Bank stocks rose after Congress agreed to a $US1.1 trillion spending package to keep the US Government operating for the rest of the US financial year to avert a potential shutdown

US President Donald Trump worried markets after an interview with Bloomberg where he raised the possibility of a tax on petrol and diesel fuel to fund infrastructure projects and suggested breaking up banks to keep their commercial and investment arms separate.

In US economic news, consumer spending slowed down in March and factories expanded less than expected.

Personal income rose 0.2 per cent, while personal spending was unchanged.

ANZ economists said the data backed up similar numbers for personal consumption in last week’s US first-quarter economic growth figures, which showed the economy had expanded at the slowest pace in three years because of weak consumer spending.

Factory data for April showed that new orders and employment had dropped.

The US ISM manufacturing index dropped to 54.8, below expectations of 56.5.

Despite the weakness in the data, markets are betting on a 70 per cent chance that the US Federal Reserve will increase official interest rates again next month.

Across the Atlantic, a number of European stock markets, including the UK market, were closed for the May Day holiday.

Rates expected to be kept on hold

Meanwhile, the Reserve Bank is expected to leave interest rates on hold for another month when it meets today.

The market has effectively priced in no chance of a change, odds which are supported by all the 65 market economists surveyed by Reuters.

Mr Whetton said, given the strength of the Australian dollar overnight, any statement from RBA leaning to another cut could spark a sharp fall in the currency.

Official interest rates have been hold since August last year at a record low of 1.5 per cent, although banks have been increasing their lending rates, particularly to property investors.

Most of the economists in the Reuters survey forecast rates will be hold for the next year, while roughly a third tipped a rate rise by the middle of 2018.

IG Markets chief market strategist Chris Weston said the half year earnings from ANZ would have a bigger impact on the market than the RBA’s statement, “but of course, that depends on the numbers and the outlook for its operating environment”.

ANZ delivered a slightly weaker than expected interim cash profit of $3.4 billion.










First posted

May 02, 2017 09:42:35

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