News

The S&P 500 ended the session flat, as while inflation may has peaked it is remaining stubbornly high putting the brakes on the market’s anticipation of a slow down inflation.

Fletcher Building weighs the NZX down, Star Entertainment sinks, Palantir posts profit, and Contact Energy posts a solid result.

Happy monday, let’s get cracking – a lot to cover today. M&A over in the UK; ChatGPT’s (not so) existential threat to Alphabet, Dan Loeb jumps into Salesforce, entrenched inflation over in Norway & the US, and Mainfreight signals slowing growth.

Elders’ shares rise, Manchester United jumps +8.78% amid takeover talk, Disney fends of Nelson Peltz, and Mainfreight starts to show signs of slown-down.

US markets (S&P 500 Index –1.1%) were lower overnight, as investors digested mostly weaker earnings as well as the Fed reiterating their hawkish stance, which has been mostly ignored by the market recently. 

The Australian market (ASX200 Index, -0.5%) after the Reserve Bank of Australia increased it increased interest rates for the ninth time in a row.

Long story short, tech reported “underwhelming” earnings which prompted a much needed sell-off. This was a classic Soros-style “reflexivity” trade – earlier in the week we saw a rally based upon the notion that i) The Fed would hike interest rates 25 bps and ii) the Fed might pause or pull make rates later in the year. The beaten-down “loss making companies” surged (CVNA, OPEN, etc) and acted like the tide that lifts all boats. Tech earnings acted as a much-needed antidote, with big players like Alphabet (GOOG) and Amazon (AMZN) falling anywhere from 400-1000 bps within the day. If anyone needed a reminder that the market is not rational, this was it.  

US markets (S&P 500 Index +1.5%) continued to rally as investors bet that rates are close to their peak. We think there’s a disconnect here: markets are pricing in a rate cut by the end of ‘23, whereas the Fed has said it will “stay the course” and won’t be making any cuts at all this year.

US markets (S&P 500 Index +1.1%) was in the red for most of the session but then jumped into positive territory on Wednesday, following Fed Chairman Jerome Powell’s slightly dovish tone compared to its December meeting.