Morning Wrap: ASX 200 to fall sharply, US stocks record worst month in 5 months

It was bound to happen. After five months of consistent gains to end 2023 and start 2024, the US equity market recorded a month of losses. A combination of mixed earnings, concerns over the Fed's next move, and rapidly changing market sentiment sent stocks lower yesterday. 2-Year yields hit the highest since November, and are back over the psychologically important 5% level.

On the earnings front - Amazon's AWS business reported its best revenue growth in a year while Pinterest shares surged more than 20% following its earnings beat. On the downside, Starbucks' Q1 results and guidance left a bitter aftertaste in its shareholders' mouths while chip maker AMD reported a near-50% drop in gaming revenues.

Let's dive in.

S&P 500 SESSION CHART

A brutal day of selling ended with an almighty slide in the final hour. (Source: TradingView)

OVERNIGHT MARKETS

• Wall Street hit by Fed jitters to close wild April

• Dow sheds 570 points as stocks seal awful April ahead of Fed interest-rate decision

• ‘Sell in May and go away’? This year the calendar ‘trick’ overlaps with a Biden-Trump rematch

• Investors getting jittery about upcoming US presidential election with taxes, tariffs and debt the hot topics

• Goldman Sachs says momentum traders are modelled to buy equities over next week regardless of market direction

INTERNATIONAL STOCKS

• Amazon reports strong cloud unit sales on rising AI demand

• Starbucks posts first sales drop since 2020 during global pullback

• Binance founder CZ gets four months in prison

• AMD’s gaming-chip sales drop nearly 50%, stock falls 3%

• McDonald’s stock bounces as revenue beat, new ‘larger’ burger offset profit miss

• 3M’s stock surges toward a 14-month high after profit, sales beat expectations

• Coca-Cola’s Q1 results beat top- and bottom-line estimates, boosted by ‘dynamic backdrop’

• Eli Lilly’s stock jumps as Q1 profit tops estimates amid strong sales of its diabetes treatments Mounjaro, Zepbound

• Apple poaches dozens of Google's AI experts, creates secretive European laboratory in Zurich

• Samsung Electronics returns to profit for first time in two years; says AI demand to drive H2

CENTRAL BANKS

• May Fed meeting messaging will revolve around higher for longer

• Fed tightening impact limited by housing, equity market tailwinds for wealthier Americans

• ECB's Knot says June rate cut realistic, citing declining inflationary pressure in the Eurozone

• ECB VP Guindos notes of challenges for the central bank to achieve its inflation goal

• PBOC takes steps to stop CGB bull market, unlikely to become buyer for now

• Majority of Bank of Korea board members don't see any rush to cut interest rates

ECONOMY

• US labour costs rise by most in year in sign of wage pressures

• Eurozone inflation steady in April, paving way for June ECB rate cut

• Europe's major four economies grow faster than expected in Q1, boosting revival hopes

• China official non-manufacturing PMI softer than expected, Caixin manufacturing index firmer

• China's top ruling lawmakers signal support for property and willingness to cut rates

• Japan industrial production beats, retail sales disappoint, jobless rate unexpectedly steady

• German retail sales up more than expected in March

• Taiwan's economy expanded at the fastest pace in almost three years as AI demand boosts tech exports

• South Korea activity data mostly soft, industrial production posts biggest drop in 15 months

GEOPOLITICS

• Hope rises for renewed Gaza ceasefire as Israel lowers demands, Hamas urged to accept terms

• ICC told arrest warrants for senior Israeli officials will be met with US retaliation

• Tesla and TikTok highlight US-China battle of data which is just getting started

ASX TODAY

• Keep an eye out on Nexgen Energy shares as the dual-listed uranium miner is about to launch a $200 million equity placement.

• In the meantime, Bapcor is searching for (another) new CEO after Paul Dumbrell said he wouldn't take the job just two days before he was due to start.

• And in private company news, another airline bites the dust - this time, Bonza entered voluntary administration and its fleet of aircraft has been repossessed.

Companies trading ex-dividend: 

• Wed 1 May: DRA Global (DRA) – $0.11

• Thu 2 May: WAM Strategic Value (WAR) – $0.022, Waterco (WAT) – $0.07, Acorn Capital (ACQ) – $0.028, Bank of Queensland (BOQ) – $0.17

• Fri 3 May: None

Economic calendar (AEST):

• 8:45am – NZD – Unemployment change, unemployment rate

• 10:30am – JPY – Final manufacturing PMI

• 4:30pm – AUD – Commodity prices y/y

• 10:15pm – USD – ADP non-farm employment change

• 11:45pm – USD – Final manufacturing PMI

Overnight:

• 12:00am – USD ISM manufacturing PMI, JOLTS job openings, ISM manufacturing prices, construction spending

• 12:30am – USD – Crude oil inventories

• 4:00am – USD – Federal Funds Rate, FOMC statement

• 4:30am – USD – FOMC Press conference

This Morning Wrap was written by Hans Lee and Chris Conway.