Stan Choe
The US stock market is hanging just below its records while oil prices keep dropping on hopes that a deal may be nearing to allow tankers to deliver crude once again from the Persian Gulf to customers.
On Wall Street, the S&P 500 fell 0.5 per cent from its all-time high set the day before while the Dow Jones was down 328 points, or 0.6 per cent, and the Nasdaq composite fell 0.3 per cent from its own record. The Australians sharemarket is set to fall sharply, with futures at 4.59am AEST pointing to a loss of 137 points, or 1.5 per cent, at the open. The ASX added 1 per cent on Thursday. The Australian dollar was trading at US72.29¢.
The price for a barrel of Brent crude oil, the international standard, fell 0.5 per cent to $US100.71, down from more than $US115 early this week. It and gasoline are still much more expensive than they were before the war with Iran began, but hope is rising in financial markets as Iran said it was reviewing the latest US proposals on ending their war.
Of course, Wall Street has rallied strongly before on hopes for a coming end to the war with Iran, only to get quickly disappointed. That could happen again, and tensions are still high in the Middle East after a US fighter jet shot out the rudder of an Iranian oil tanker in the Gulf of Oman Wednesday as it tried to breach the American blockade of Iran’s ports.
Despite all those uncertainties, a powerful parade of US companies saying they made even bigger profits during the first three months of the year than analysts expected has helped support the US stock market. Stock prices tend to follow the path of corporate profits over the long term.
Datadog leaped 28.2 per cent to help lead the US market after the monitoring and security platform for cloud applications topped analysts’ expectations for profit in the latest quarter.
Albemarle rose 5.7 per cent after the lithium products and specialty chemicals company likewise delivered better-than-expected results. Taser maker Axon Enterprise rallied 10.7 per cent after raising its forecast for revenue this year in part because of big growth for its counter-drone products.
They helped offset a 13.2 per cent drop for Whirlpool, which tumbled after reporting much weaker results than analysts expected. It announced the largest price increases in a decade for its major appliances in North America, while accelerating cuts to its costs, as it contends with weaker confidence among US consumers.
Shake Shack dropped 29 per cent after its results for the latest quarter fell well below analysts’ expectations.
McDonald’s was mostly unchanged even though its revenue for the latest quarter edged past analysts’ expectations. CEO Chris Kempczinski said high gasoline prices and consumer anxiety over the Iran war could dent its sales this spring.
In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury rose to 4.39 per cent from 4.36 per cent late Wednesday, but remains down from 4.45 per cent early this week.
Lower yields can bring down rates for mortgages and other kinds of loans going to US households and businesses, which in turn can give the economy a boost. Lower yields also tend to push upward on prices for stocks and other kinds of investments.
The 10-year Treasury yield, though, remains well above its 3.97 per cent level from just before the war.
Several reports on the US economy also came in mixed. One said more US workers applied for unemployment benefits last week, but the increase was not as bad as economists expected. Another report suggested that productivity for US workers improved by only half of what economists expected for the latest quarter.
In stock markets abroad, indexes fell in Europe following a stronger finish in Asia.
Japan’s Nikkei 225 roared 5.6 per cent higher as trading in Tokyo reopened following a holiday and caught up with big gains for Asian markets from earlier in the week. It’s at a record after soaring nearly 71 per cent in the last 12 months on strength for tech stocks benefiting from the boom in artificial intelligence.
“I think it’s a kind of bubble because buying activity concentrated on leading AI, artificial intelligence stock and semiconductor-related stocks. It’s a situation where only semiconductor stocks are being bought,” said Takashi Hiroki, chief strategist at MONEX.
