Positive momentum starts to fade in the global equity market

On Monday, the S&P 500 inched up to nearly 0.1%, nearing record highs for its 24th close this year. The Nasdaq 100 hit a fresh record high, climbing 0.6% fueled by a tech rally. Conversely, the Dow Jones dipped by 196 points, weighed down by JP Morgan Chase’s 4.5% drop. Investors await clues on Fed interest rate cuts amidst the ongoing earnings season, with Nvidia leading tech gains while Target shares slid.  Elsewhere, the Stoxx 50 in the Euro Area closed slightly higher yesterday, gaining around 0.2%, buoyed by positive corporate results, with industrial shares leading gains while autos declined. 

Summary for 21.05.2024 

• Asian equities mostly dipped on Tuesday, with Hong Kong’s Hang Seng leading losses due to a slump in electric vehicle and tech shares. Chinese markets retreated from recent highs amid profit-taking and anticipation for further stimulus measures. Uncertainty over US interest rates lingered, influencing market sentiment across the region. 
• European equity markets head for a lower open while US equity futures remain steady post-Nasdaq record close, as positive momentum fades as we get closer to the end of the Q1 reporting season. 
• Oil prices in Asian trade edged lower amid uncertainty following the death of Iran’s President and fears of high US interest rates impacting demand. Brent and WTI crude futures fell 0.4%. Concerns over the Saudi King’s health added to market uncertainty. OPEC’s upcoming meeting in June is awaited for further production cues. 
• The Reserve Bank of Australia‘s May meeting minutes revealed concerns over slower-than-expected inflation decline, prompting discussions on a potential interest rate hike. However, the board ultimately decided to maintain rates to avoid excessive adjustments, emphasising the priority of returning inflation to the 2-3% target range, expected by H2 2025. 
• A series of hawkish comments from Federal Reserve officials is keeping equity investors cautious.  The Fed’s Loretta Mester mentioned potential policy tightening, with speeches from Christopher Waller, John Williams, Michael Barr, and Raphael Bostic anticipated later today. 
• Palo Alto Networks‘ disappointing fourth-quarter billings forecast, reflecting cautious corporate spending on cybersecurity solutions amid inflation concerns, led to an over 8% drop in its shares in aftermarket trading. The company’s cautious outlook, coupled with concerns over cybersecurity growth deceleration, disappointed investors despite a slight beat in third-quarter revenue and earnings. 
• Zoom Video Communications reported stronger-than-expected first-quarter results, exceeding analyst estimates for both earnings per share and revenue. Despite this, shares fell 1.1% due to cautious guidance for the second quarter and fiscal year 2025. CEO Eric S. Yuan credited AI integration and strategic investments for the strong performance. 
• Airbus secured a significant victory as Saudia Group ordered 105 of its narrow-body aircraft, including A320neo and A321neo models, valued at approximately $19 billion. This marks Airbus’s resurgence in Saudi aviation, outpacing Boeing in the deal and underscoring the country’s ambition to become a regional aviation hub. 
• Target plans to lower prices on 5,000 popular items, including essentials like milk and diapers, to attract budget-conscious shoppers amidst high food prices and inflation concerns. This move aims to compete with Walmart and accommodate cash-strapped customers, with discounts extending to Memorial Day promotions. McDonald’s may also introduce a $5 meal deal for similar reasons. 
• Jamie Dimon, CEO of JPMorgan Chase, has adjusted his retirement timeline, indicating it’s no longer five years, and assured shareholders of succession planning progress by promoting key executives. Expressing concern over overvalued shares, Dimon cites economic risks like inflation and interest rates, advocating prudent financial management and signalling a cautious approach to share buybacks in response to market conditions. 
• Microsoft unveiled new PCs featuring Qualcomm chips designed for efficient AI processing, promising longer battery life. The devices, starting at $999, support AI features like Copilot chatbot and Recall, which operate offline. This move aims to compete with Apple’s Arm-based MacBooks.  
• Norwegian Cruise Line Holdings raised its full-year profit forecast due to strong demand for cruises and higher ticket prices. Anticipating a record number of passengers, the company expects an adjusted profit of $1.42 per share and plans to order eight new ships. Despite a recent revenue miss, shares surged on optimistic projections.